Law Times

Law Times • apriL 16, 2018 Page 9 www.lawtimesnews.com Class actions on worker misclassification will continue BY MICHAEL MCKIERNAN For Law Times W orker misclassifi- cation class actions are here to stay, according to the growing band of employment lawyers handling cases for plain- tiffs. In his recent decision in the matter of Heller v. Uber Tech- nologies Inc., Ontario Superior Court Justice Paul Perell stayed an action by Uber drivers who claimed they should be con- sidered employees of the ride- sharing app's creators under On- tario's Employment Standards Act rather than independent contractors to the company. Perell's decision did not touch on the merits of the claim but stayed the action in favour of arbitration under a clause in the service agreement signed by all Uber drivers. However, the case is just one of a number of similar matters currently before the courts, and the drivers' counsel, Toronto employment lawyer Lior Sam- firu, says he expects more to fol- low. "Employee misclassification is one of the top two or three is- sues coming up in my practice right now; it's unbelievably com- mon," says Samfiru, co-founder of Samfiru Tumarkin LLP, add- ing that Perell's decision has been appealed. Stephen Moreau, a partner at labour and employment law boutique Cavalluzzo LLP in To- ronto, says an increasing num- ber of businesses are engaging workers under agreements that describe them as independent contractors, rather than more formal employment agreements. He recently launched a $20-million claim against Blyth Academy on behalf of a number of former sessional teachers at the private school in Toronto. The proposed class action al- leges that teachers classified as independent contractors, who were paid f lat rate fees to instruct courses, missed out on overtime, vacation pay and severance pay- ments, as well as a host of other protections available to employ- ees under the ESA, such as the right to minimum wage. In a statement of defence, the school denies the claims, none of which has been proved in court, and says all its workers were properly classified. "Employers do have to be cautious, and what this case re- minds us is that there are em- ployers in more traditional in- dustries trying it out for size and calling their workers contrac- tors," Moreau says. Samfiru, who advises em- ployers as well as employees in workplace matters, says the principals at smaller companies in particular do not always ap- preciate the risks of entering contractor relationships with their workers. "A lot of them are trying to do the right thing, without think- ing that they are doing anything illegal, only to learn the hard way that it's not as simple as call- ing someone an independent contractor," he says. "It's about form over substance, so if they look and act like an employee, it doesn't matter if they're called something else in the agree- ment." Samfiru explains that when courts or labour ministry offi- cials are asked to decide how a worker should be classified, the contract between the parties is not determinative, and the rul- ing is made based on a number of other factors. They include the amount of control the company exerts over the working conditions of its contractor, such as the hours and methods of work, as well as the level of integration between the two. In addition, which par- ty provides the tools of the craft and who bears the financial risks in the relationship will also have an impact on how the arrange- ment is characterized in the eyes of the law. "Employers generally don't see why the contract shouldn't be enforceable, but meanwhile, they're not withholding any taxes for people who they maybe should be treating as employ- ees," Samfiru says. "There are substantial penalties for mis- classification and, hopefully, as these issues get more attention, more employers will appreciate their legal obligations." According to Toronto em- ployment lawyer Andrew Monkhouse, many employers are attracted to contractor re- lationships with workers by the accounting simplicity of a small- er workforce. "In my experience, it's mo- tivated by the tax implications, rather than avoiding vacation pay or other ESA entitlements. It can be quite onerous on small businesses to do statutory de- ductions for employment insur- ance and [the Canada Pension Plan] on a monthly basis," he says. "But over time, misclassifi- cation can hurt workers." Monkhouse says scrutiny on this type of arrangement is likely to spike in the near future, fol- lowing the passage at Queen's Park of Bill 148, the Fair Work- places, Better Jobs Act. The bill, which received Royal assent in November 2017, altered the ESA, placing the burden on employers to prove that contractors are not in fact employees should a dis- pute arise over classification. The new law also came with a promise to boost enforcement, with funding provided for as many as 175 new employment standards inspectors. "Reversing the onus may well result in more class actions moving forward claiming mis- classification," predicts Monk- house, who acts for a group of document review lawyers suing Deloitte LLP in a $400-million lawsuit alleging the accounting giant improperly classified them as independent contractors. Ryan Plener, a lawyer with the Toronto office of management- side employment law boutique Hicks Morley Hamilton Stew- art Storie LLP, says the recent legislative changes mean now is a good time for employers to reassess their relationships with contractors. "It's always important to en- sure people are properly classi- fied. Whenever I meet with cli- ents, one of the things I ask them to do is to send me a copy of their contracts, so that we can review relationships and understand whether or not they fit into the category where they have been placed," he says. "The government is signal- ling that employers should be cognizant of their relationships and that education is important on all sides." Those who do move forward with claims will still have to con- vince a judge that their case is worthy of certification as a class action. In January, Perell's decision in Sondhi v. Deloitte Manage- ment Services LP certified the document review class action against Deloitte after accepting a replacement, more suitable rep- resentative plaintiff than the one originally proposed. Monkhouse says that his fo- cus is now on formally notifying the class of more than 400 law- yers of the certification, as well as further document discovery before the case heads toward a common issues trial, where the classification issue will be set- tled. In the Uber case, the driv- ers' action was shut down pre- certification, though Samfiru remains hopeful that Perell's decision in that matter will be overturned on appeal. The judge ruled that drivers were bound by an arbitration clause in their service agree- ment, which requires all dis- putes to be resolved by arbitra- tion in the Netherlands and that the result was not precluded by the ESA. But Samfiru says it's "practically unworkable" to ex- pect individual Ontario driv- ers to proceed with arbitration claims abroad. "In our view, if the contract provides a remedy that is not ac- cessible in reality, then it has no meaning," he says. Plener says Perell's decision is a useful one for counsel on both sides of the bar. "Whether you're acting for employers or employees, it's helpful to have the principle stated upfront that arbitration agreements are not necessarily or expressly ousted by the ESA," he says. LT FOCUS Lior Samfiru says employee misclassifica- tion is one of the top issues he's encounter- ing in his practice. Every time you refer a client to our law firm, you are putting your reputation on the line. IAN FURLONG | STACEY STEVENS | CARR HATCH Since 1936 Thomson, Rogers has built a strong, trusting, and collegial relationship with hundreds of lawyers across the province. With a group of 30 civil litigators and a support staff of over 100 people, we have the resources to achieve the best possible result for your client. We welcome the chance to speak or meet with you about any potential referral, and look forward to creating a solid relationship with you that will benefit the clients we serve. YOUR ADVANTAGE, in and out of the courtroom. TF: 1.888.223.0448 T: 416.868.3100 www.thomsonrogers.com IT IS ALL ABOUT TRUST WELL PLACED. Untitled-6 1 2018-04-11 10:00 AM

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