Law Times

February 22, 2016

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Page 2 February 22, 2016 • Law Times They were awarded the highest-ever dismissal-without- severance settlement for con- tractors in Ontario of approxi- mately $125,000, in lieu of 26 months notice. In its decision, the appeal court stood by the Superior Court of Justice award and found it should not be reduced because of dependant contractor status. Labour and employment lawyer George Vassos, a part- ner with Littler Mendelson PC in Toronto, says the upholding of the 26 months award was a somewhat surprising decision in light of recent rulings from other provinces that reduced awards based on the dependant contrac- tor status. Vassos, commenting on the case for Law Times, says it will likely lead to increased liti- gation in this area of law. "There was no finding that the dependant contractor status au- tomatically leads to a lesser notice entitlement," Vassos says. "What we end up with is a decision where the court technically said they were dependant contractors but gave them a top-of-the-line notice requirement, without ex- ceptional circumstances. "The 26-month number is a big number, it's a very noticeable number, so, in the face of that, what companies should be do- ing with their counsel is thinking about how to mitigate the risk of these types of relationships leading to these types of notice awards," Vassos adds. "The whole notion of traditional work rela- tionships is evolving and chang- ing over time; I think given the changes in the workforce and the changes in work relationships, we're likely to see more of these cases coming forward." The Keenans began working with Canac — a manufacturer, distributor, and retailer of kitch- en cabinets and accessories — in the mid-1970s as installers and foremen. In 1987, their working rela- tionship changed after they were notified they would be contrac- tors for Canac as delivery and installation leaders. According to that agreement, the Keenans were to provide their own trucks and deliver the kitchen products from Canac to the customers. Canac set rates to be paid to the installers and the Keenans paid the installers with funds provided from Canac. The Keen- ans would continue to be paid as before on a piece-work basis for units installed, but the amounts were increased to ref lect the fact they were paid in gross, with- out deduction for income taxes, employment insurance, and the Canada Pension Plan. The agreement also required the Keenans, as Canac subcon- tractors, to devote "full time and attention" to their Canac duties. When work with Canac slowed down in 2007, the Keenans be- gan working for a competitor, Cartier Kitchens, still devoting approximately three-quarters of their work hours to Canac. In March 2009, the pair was told without notice nor pay in lieu of notice that Canac was closing its doors and its services would no longer be required. The Keenans subsequently brought the wrongful dismissal action, arguing they were dependant contractors and were due sever- ance and notice. "The trial judge observed that, in the jurisprudence leading to a recognition of the intermediate category of dependent contrac- tors, a finding that the worker was economically dependent on the company due to complete ex- clusivity or a high level of exclu- sivity weighed heavily in favour of the conclusion that the worker was a dependent contractor," Jus- tice Eileen Gillese wrote in the appeal court decision, with jus- tices Jean MacFarland and Kath- erine van Rensburg agreeing. "In my view, this observation is not only correct, it is vital to understanding how the question of exclusivity is to be approached. Exclusivity cannot be deter- mined on a 'snapshot' approach because it is integrally tied to the question of economic dependen- cy. Therefore, a determination of exclusivity must involve, as was done in the present case, a con- sideration of the full history of the relationship. It is for the trial judge to determine whether, after examining that history, the work- er was economically dependent on the company, due to exclusiv- ity or a high level of exclusivity." Canac appealed the Superior Court's finding of exclusivity, contending that around the time of the termination, the Keenans were working for a competitor and, as such, were not dependant contractors. They also appealed through their counsel Paul Boshyk, who declined to comment, that the tri- al judge erred in setting an award greater than 24 months without detailing a finding of exceptional circumstances, requesting a pay in lieu of notice be set between 16 and 18 months instead. Justice Gillese denied that por- tion of the appeal in light of the plaintiffs' ages and lengths of ser- vice to the company as well as the character of the leadership posi- tions they held with the company. "For over a generation, they were Canac's public face to the outside world," Gillese wrote. "Over a period of approximate- ly 30 years — the entirety of their working lives — the Keenans' in- come had come from Canac and they relied on that income to sup- port themselves and their fam- ily. Even during the approximately two years that they provided some services to Cartier, a 'substantial majority' of the Keenans' work continued to be done for Canac. "These circumstances justify an award in excess of 24 months and I see nothing wrong in the trial judge's finding that 26 months notice was reasonable," Gillese wrote. "It's the very first time, not- withstanding that they are de- pendant contractors, that the [Ontario] Court of Appeal en- dorsed 26 months," Lecker says. "I think it's going to cause a lot more litigation or it's going to cause a lot more of these compa- nies to take notice." LT Decision will likely lead to more litigation, lawyer says NEWS Continued from page 1 MATTER CREDENTIALS TORONTO I BARRIE I HAMILTON I KITCHENER 1-866-685-3311 I A Noticeable Difference ™ Choosing a personal injury lawyer is one of the most important decisions an injured person will make. Help your client ask the right questions: Is the lawyer? Untitled-4 1 2015-02-17 10:59 AM George Vassos says the decision was some- what surprising in light of recent rulings.

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