In ARH Developments Inc. o/a ARH Holdings v Elrateb, 2025 ABESAB 18, the Alberta Employment Standards Appeal Body concluded that a worker was an employee, not an independent contractor, and was therefore entitled to unpaid wages, overtime pay, and vacation pay.
This decision reinforces the importance of maintaining accurate records regarding hours of work even when the parties have agreed on payment a flat fee instead of an hourly rate.
Facts
The key facts are as follows:
- Mohammad Elrateb worked as a security guard for ARH Developments Inc. o/a ARH Holdings from September 1, 2024, to October 1, 2024.
- The worker had met the employer through a friend, Malik, who worked as a security guard. Malik would soon leave on a lengthy vacation and introduced the worker to the employer so that the worker could fill-in for Malik while he was away. The parties verbally agreed that the employer would pay the worker $3,000 for the month of September 2024.
- The worker resigned at the end of September 2024 and asked to be paid for his work so far. The employer did not pay.
- The worker filed a complaint seeking wages calculated based on the hourly minimum wage as well as overtime and vacation pay. An Employment Standards Officer ordered the employer to pay the worker $2,880.00 as wages, $1,423.13 as overtime pay, and $115.20 as vacation pay.
- The employer appealed against the Order arguing that the worker had been an independent contractor, not an employee, and that the worker had not worked all the hours he had alleged.
Analysis / Conclusion
Was the Worker an Employee or Independent Contractor?
The Appeal Body applied the test from Sagaz Industries Canada Inc., 2001 SCC 59, to whether the worker performed services as an employee or independent contractor. The Appeal Body considered factors such as control, provision of equipment, hiring of helpers, financial risk, and opportunity for profit.
The Appeal Body found the worker to be an employee. The employer retained control over how, where, and when the worker performed work. The worker was paid a fixed rate for set hours and therefore did not have an opportunity to profit. The worker did not bear any financial risk. Crucially, the employer had provided the worker with access to the tools necessary for the job, including a key to the building and a “swing knife” for self-defense.
The Appeal Body relied on its previous decision: Lika Contracting and Services Ltd. v Roldan, to conclude that the parties’ agreement of a flat fee without benefits or source deductions was not determinative of employment status. The evidence more strongly pointed towards the worker being an employee, not an independent contractor.
Wages, Overtime Pay, and Vacation Pay Owing to the Worker
The worker recorded the days he worked in a notebook. His shift was from 9:00 pm to 7:00 am. The employer argued that the worker only worked from 9:00 pm to 5:00 am and had missed several days of work. The employer did not keep a contemporaneous record of the worker’s hours but later created a time sheet from memory and reviewing text messages.
The Appeal Body preferred the evidence of the worker, confirming that when an employer fails to keep an up-to-date record of the hours worked by an employee, the Appeal Body will “have little choice but to accept” the hours claimed by the worker. The Appeal Body further concluded that because the employer was not at the worksite during the worker’s shift, it was the worker who “had the best knowledge of when he started and ended his shift”.
The Employment Standards Code prevents the parties from agreeing to an hourly wage that would be lower than the minimum wage required by section 9 of the Regulation. Considering the 255.25 hours the worker had worked over the course of September 2024, he could not have agreed to receive only $3,000 for the month. The Appeal Body calculated the worker’s entitlements based on the minimum wage required by the Regulation and reached the same figures as the Employment Standards Officer.
My Take
For employers, this decision underscores the importance of maintaining adequate records of hours worked, a requirement under section 14(1) of the Code, including in circumstances where the parties have agreed to a flat fee as opposed to an hourly rate. The employer’s failure to maintain adequate records resulted in the Appeal Body having no choice but to accept the worker’s evidence regarding his hours worked.
This decision also encourages employees to maintain their own records of the hours they work. Here, the worker’s diligent recording of his working hours into a notebook allowed him to successfully protect himself from the employer’s own poor recordkeeping.
Lastly, the decision builds upon the Appeal Body’s previous rulings regarding the differences between employees and independent contractors, confirming that payment of a flat fee instead of an hourly rate is not determinative of employment status when other factors, such as control or the provision of tools, are more indicative of a certain outcome.
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