Misclassifying Contract Workers

Young man looking pensive at a computer screen | misclassifying Contract Workers

Misclassifying Contract Workers | Authors: Bram Lecker & Kimberley Sebag

Misclassifying Contract Workers

When Bill 148, Ontario’s Fair Workplaces, Better Jobs Act, 2017 became law in January 2018, reforms to our employment laws were long overdue. The Employment Standards Act, 2000 (ESA), which governs Ontario worker rights, inadequately addressed conditions uniquely faced by precariously employed workers. The new legislation filled this gap. Specifically, it requires employers to be clear about the status of their temps. Misclassifying contract workers as independent contractors is now unlawful.

Over the last decade, we have observed a steady decline in full-time, permanent jobs. During this time, Ontario also witnessed a 20% growth in the number of temp agencies operating in the province. Employers, large and small, preferentially hired contractors as temps. The agencies provided them with a steady stream of highly qualified and flexible workers. And employers conveniently avoided all the costs commonly associated with full time, permanent jobs. They assumed such workers did not qualify for vacation or overtime pay, disability benefits and termination pay.

Such hiring practices have clearly benefited employers. They have saved money by docking temp workers their traditional employment benefits. Compared to a generation ago, workers cannot count on the benefits, job security and wage growth their parents took for granted at the same stage in life. And consequently, precarious employment has lowered the quality of life for many Ontario workers.

Classifying Contract Workers

To understand how contract workers are classified, it is noteworthy to mention our precedent setting case Keenan vs. Canac Kitchens. In 2016, our team forged some of the early guidelines for classifying contract workers. The Keenans, a husband and wife team, worked for Canac Kitchens, initially as employees and then as contractors. The contractor title brought little change to their employment terms. Canac Kitchens continued to treat them as employees in every way until their termination. That’s when they denied the Keenan’s reasonable notice or severance pay by declaring them independent contractors.

We took Canac Kitchens to task over this matter. True independent contractors operate like a business. They declare profits and losses, use their own tools and control their own schedule.  Most importantly, they are free to subcontract work to other parties and are not financially dependent on a single employer. We successfully proved that the Keenans did not fit this profile. Justice Gillam used this case as an opportunity to establish a new class of worker in Ontario: The Dependent Contractor

Dependent Contractor Rights

Bill 148 created a much-needed framework of rights for dependent contractors. If you are among thousands of dependent contractors in Ontario, like the Keenans, then the law is finally clear. It offers you the same protection as employees. Furthermore, Bill 148 puts the onus of accurate employee classification squarely on employers. When they deem you an independent contractor and deny your entitlements they, not you, must prove their case. Employers risk significant fines for misclassifying contract workers.

In addition, Equal Pay for Equal Work provisions require employers to pay part-time workers equal wages as their full-time counterparts, if they perform the same work. In fact, this condition also applies to temporary, seasonal, casual, and agency employed dependent contractors. Effectively, employers are now de-incentivized from continuing precarious work conditions. They no longer save money by hiring temps to do the same work as full-time employees.

As a dependent contractor, you may safely inquire about your wages, overtime and vacation pay. Your employer cannot threaten or terminate you for making such inquires. In fact, the law requires them to adjust your pay if it is lower, or report, in writing, their reason for denial.

Termination Pay for Dependent Contractors

The law also addresses termination pay for dependent contractors. If your work assignment lasts at least three months, you are entitled to receive 1 weeks’ notice of termination. This brings your termination benefits in line with permanent employees protected under the ESA.

The Keenans received the highest ever compensation in Ontario for contract workers wrongfully dismissed without notice and severance.  With that precedent, Bill 148 made one fact crystal clear: dependent contractors are not inferior to employees. While the ESA stipulates the minimums, your notice and severance entitlements will continue to depend on your age, position, length of service and employability.

Scotiabank: Misclassifying Contract Workers?

We were therefore, quite interested to read about the employment situation of George Fawcett. The Toronto Star summed up his situation like this:

“George Fawcett, 31, shows up to the same downtown bank office every day on a schedule set by supervisors who trained him and direct his daily activities. But according to the temporary employment agency that placed him there, he is not actually an employee — either of the agency or the bank.”

For all intents and purposes, Mr. Fawcett appears to be a full-fledged employee of Scotiabank. That is, until he expected someone to pay his vacation and overtime entitlements. When he inquired about them, neither Scotiabank nor the temp agency, consider him an employee!  The temp agency went on to reprimand him for attempting to clarify his status. 

Canadian banks are in fact, governed by the Canada Labour Code (CLC). This is a comprehensive legislative regime protecting federal workers. We are not surprised at all that Mr. Fawcett has filed a complaint with the Federal Ministry of Labour to determine whether Scotiabank is misclassifying contract workers.

Federal Employee Rights

First of all, any employer would be sanctioned for reprimanding Mr. Fawcett for inquiring about his rights, regardless of Provincial or Federal jurisdiction. And secondly, if Mr. Fawcett is employed exclusively by Scotiabank, or even in an economically dependant relationship, then he would be entitled to receive extensive remedies. They include reinstatement and damages along with no-cost mediation and adjudication proceedings.

In fact, federally legislated employees receive superior job protection virtually akin to unionized workers. If you are unjustly dismissed without cause, then you are in a very advantageous position. Under the CLC, federal employees can only be fired for just cause or with a redundancy in the position.

Lecker & Associates have successfully represented employees for over 35 years. If you primarily work through temp agency placements, then it might be worth your while to book a 1-hr consultation with one of our experienced employment lawyers to review your status. You might be leaving money on the table if your employer has intentionally misclassified you as an independent contractor. This is an area of employment law we helped shape and we understand the landscape better than most.

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