How You Treat Your Employees Transcends How You Categorize Them

In recent years, companies like Uber have increased the public’s awareness of “worker misclassification”. While most non-lawyers likely don’t know (or care) about the legal nuances of the employee vs. independent contractor distinction, they understand that how a worker is categorized can affect her legal entitlements, particularly when she is dismissed from her job. In Canada, if an employer fires an employee “without cause”, it must give the employee notice of the firing or severance; the same is not necessarily true when an employer ends its relationship with an independent contractor.contract

One nuance of worker classification that is worth knowing is that employment relationships exist along a continuum.

Employees and independent contractors exist at either end of this continuum, with a third category of workers – dependent contractors – falling somewhere in the middle.

This third category was the focus of a recent case out of Ontario, Keenan v. Canac Kitchens.

The Keenans (husband and wife) both worked for Canac for well over 20 years, but received no notice or severance when the company let them go. The Keenans sued their former employer for damages, arguing that they were dependent contractors. The case went as far as the Ontario Court of Appeal, with Canac countering that the Keenans were actually independent contractors because they worked part-time for a competitor during their last two years with Canac.

The Keenans ultimately triumphed, receiving an award of nearly $125,000 (equaling 26 months notice), with both the trial and appeal courts emphasizing the fact that the vast majority of the spouses’ working relationship with Canac had been an exclusive one.

The Keenan case illustrates the role that context and history play when it comes to categorizing a working relationship.

It also highlights the importance of following Sustainable Employment™ practices such as clarity, transparency, fairness and respect when engaging with all of your workers, regardless of how the law classifies them – and what can happen when you don’t.

To learn more about how to create a Sustainable Employment™ relationship, click here.

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