AB Employment Standards Found A VP of Finance Was A Contractor

In Nine Lions Bioscience Corp. v Nelson, 2025 ABESAB 19 (Scott), the Alberta Labour Relations Board sitting as Employment Standards Appeal Body (“AESAB”) found that a Vice President of Finance and Logistics for Nine Lions Bioscience Corp (“Nine Lions”) was an independent contractor of Nine Lions, not an employee.

Much of the binding caselaw is favorable to a finding of “employee” status where organizations have asserted their workers are contractors.  This case is a win for those organizations.

Facts

The following were some of the pertinent facts summarized by the Appeal Body:

• Rodney Nelson (the “worker”) filed an employment standards complaint seeking wages, vacation pay and general holiday pay from his alleged employer, Nine Lions
• That complaint was successful and he was awarded a substantial sum for wages, vacation pay and statutory holiday pay
• Nine Lions appealed to the ABESAB. In the appeal, Nine Lions alleged that the worker was not entitled to these employment standards amounts because he was an independent contractor, not an employee
• It was not disputed that the worker had been an employee of Nine Lions at one time, and he had an employment agreement
• However, at one point Nine Lions asked him to enter a services agreement with Nine Lions through the worker’s numbered company (the GSA)
• The GSA described the worker’s numbered company as an independent contractor, and identified a fixed sum to be paid monthly for the worker to provide the services
• The services described in the GSA included some of what he had done as an employee, but not all. He was no longer responsible for sales and marketing and business development
• The worker no longer reported to the CEO. The GSA indicated that he reported to the directors of Nine Lions.  He sometimes had high level discussions with the two employees who took on the duties of the previous CEO, and sometimes took direction from them, but there was no evidence anyone told him to take direction from them as opposed to the directors
• The evidence did not establish ongoing or daily supervision or control of the worker
• The GSA indicated the worker was only required to work 20 hours per week and could work for third parties, and there was no evidence Nine Lions demanded or required him to work more than that
• The worker had contributed capital investment to Nine Lions over several months, apparently out of necessity to keep the business running

Analysis / Conclusion

The ABESAB cited the leading case on the differentiation between an employee and independent contractor, 671122 Ontario Ltd. v Sagaz Industries Canada Inc., 2001 SCC 59, and noted that the following factors set out in Sagaz can be relevant:

1. the level of control the alleged employer has over the worker’s activities,
2. whether the worker provides their own equipment,
3. whether the worker hires their own helpers,
4. the degree of financial risk taken by the worker,
5. the degree of responsibility for investment and management held by the worker, and
6.  the worker’s opportunity for profit in the performance of their tasks.

The ABESAB also cited Gerling v Camrose Regional Exhibition and Agricultural Society, 2022 ABCA 210 as authority for the proposition that the parties’ understanding of their legal relationship should be accorded significant weight when the agreement is in plain language and is not oppressive.

The ABESAB found some facts supporting an employment relationship, but more facts supporting an independent contracting relationship.  Regarding the “control test”, the ABESAB found as follows:

[26] In sum, what constraints there were on when, where, and how [the worker] did his work appear to have been functions of [the worker’s] view of what was needed to achieve the tasks assigned to him and his desire to ensure the success of the business, not specific directions from the [Nine Lions].  […] [Nine Lions] appears to have exerted a low level of control over [the worker’s] activities, which is consistent with the terms of the GSA. This suggests that [the worker] was not an employee …

The ABESAB placed significant weight on the wording of the GSA which described the worker as an independent contractor, not an employee, and found that this was in alignment with their conduct:

[43] From the Appeal Body’s perspective, the question is not whether the GSA is a legally binding contract. Rather, the Appeal Body considers what the GSA tells us about the parties’ agreement and intentions regarding their legal relationship. The plain language of the GSA strongly supports a finding that the parties intended and agreed that [the worker] would become an independent contractor […]. [the worker’s] own conduct following the signing of the GSA also accords with this understanding. The fact that [the worker] came to believe, sometime later, that the GSA may not have been legally enforceable, does not change the fact of the parties’ intention and agreement at the time.

In the result, the ABESAB found that Mr. Nelson was a contractor under the Employment Standards Code, not an employee.  The award of the employment standards officer was set aside.

My Take

I think this case could have gone either way.

Gerling is the most favorable decision for defending against claims of “employee” status that I am aware of in Alberta.  The weight of binding authority on this subject, including several SCC authorities is clear that the written contract between the parties is only part of the analysis – the objective is to determine the substantive relationship between the parties.  Still, Gerling hails from the Alberta Court of Appeal, so its direction is binding and will be part of any discussion of this topic in Alberta.

I think the facts in Gerling are significantly distinguishable from most actual independent contractor vs employee disputes I have seen.  Here are some unique aspects of Gerling:

1. It was Gerling’s idea to set it up as an independent contracting arrangement, and not only because of the tax implications – he had a shoe business he was running at that time and didn’t want them to mingle;
2. Gerling basically ran the entire operation for a set fee.  In other words, the deliverable was that the organization would function, and Gerling would make whatever arrangements he needed in order for that to be achieved.  It really was in the nature of a service contract between two companies.

In any event, workers intending to argue they are employees and not independent contractors should take note of the reasoning in the Nine Lions decision first.

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