The ONCA dismissed the appeal of the Appellant (Defendant) in the case of Keenan v. Canac Kitchens, 2016 ONCA 79.
The case surrounded the dismissal of two long-term and senior employees who had been dismissed after approximately 32 years of service for Lawrence Keenan and after 25 years of service for Marilyn Keenan. On termination, no pay, notice or statutory entitlements were given to either of the Plaintiffs given that the Defendant characterized the Plaintiffs as independent contractors halfway into the employment relationship by altering their job title from “Foreman” to “Delivery and Installation Leader”, paying them on a piece work basis and making the Plaintiffs obtain their own trucks for transport.
Part way into the relationship the Defendant requires the Plaintiffs to sign an agreement in 1987 indicating that the Keenans were to devote “full-time and attention” to Canac as sub-contractors. The Plaintiffs received ROE’s, which showed they had quit their jobs with Canac, in spite of the fact that the nature of employment and their duties with Canac remained unchanged. They worked almost exclusively for Canac until worked slowed and the Plaintiffs took up part-time work with a competitor to which Canac showed no disagreement towards.
The main issue at trial was whether the Keenans were dependent or independent contractors. The trial judge found that the factors in McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916 applied and held the Keenans to be dependent contractors from 1987 until their termination in 2009 given their economic dependence on Canac and given the high level of exclusivity existing in the employment relationship between Canac and the Keenans. The trial judge awarded damages of $125,000 in lieu of 26 months’ notice to which Canac appealed.
Ontario Court of Appeal
The issues on appeal were whether the trial judge erred in finding the Keenans to be dependent contractors as opposed to independent and whether the trial judge erred in awarding 26 months’ notice.
Canac took issue with the timing of the determination of exclusivity. It argued that while the Keenans worked exclusively for Canac until 2006, it had worked for a competitor afterwards and thus at termination, the Keenans were not dependent contractors. The Ontario Court of Appeal (“ONCA”) rejected this argument and upheld the lower courts determination of the high degree of exclusivity making the Keenans dependent contractors.
On the second issue of reasonable notice, the ONCA maintained the original award of 26 months given the Keenans’ senior age (63 and 61), length of service (32 and 25 years) and the nature of the positions they held. Furthermore, the ONCA took into consideration the agreed statement of facts which showed that the parties had contemplated a damages calculation of up to 26 months’ notice.
For employment lawyers in Toronto dealing with issues of wrongful dismissal and independent/dependent contractor status, this decision presents a step in the right direction towards ensuring that it is substance rather than the form of the employment relationship that dictates a workers status in an organization.
An experienced employment lawyer can help you craft contracts and advise on whether the status of an independent contract may have changed to a dependent contractor. If you are seeking a consultation with a Toronto employment lawyer specialized in all matters of employment law, please call our office at 416-921-7997.