Self-employed or Employee? It Depends Who’s Asking and Why

By: Patricia Gonzalez

Published: 9 May 2022

self-employed or employee

The recent ruling of the Court of Appeal for British Columbia in Beach Place Ventures Ltd. v. Employment Standards Tribunal, 2022 BCCA 147 (Beach Place”) does not reveal anything new. But it is a strong reminder that different courts and tribunals can and do come to different conclusions as to whether a person is an “employee” or an “independent contractor”.  This is a BC case, but it would have persuasive weight in Alberta as well.

Facts

  • Three Taxi Drivers (the “Drivers”) filed complaints with the Director of Employment Standards (the “Director”) in 2016 and 2017 under the Employment Standards Act (the “ESA”) of British Columbia. The main issue was whether the Drivers were in an employment relationship with Beach Place Ventures Ltd. and Black Top Cabs Ltd. (the “Companies”).
  • Initially, a delegate of the Director found that the Drivers were employees of the Companies for the purposes of the Employment Standards Act and that the Companies owed the Drivers monies for unpaid wages.
  • The Companies appealed the Delegate’s decision to the Employment Standards Tribunal (the “Tribunal”). As part of the Appeal, the Companies included a copy of a decision by the Tax Court of Canada, Beach Place Ventures Ltd., 2019 TCC 24 (the “Tax Decision”) where one of the Drivers was found on the basis of the same facts to be an independent contractor and not an employee for the purposes of the Employment Insurance Act (“EI”) and the Canada Pension Plan (“CPP”).
  • The Tribunal upheld the Delegate’s decision and found that the Drivers were employees of the Companies for the purposes of the Employment Standards Act despite the Tax Decision.
  • The companies then applied for a reconsideration of the Tribunal’s decision which was denied. The Companies then sought judicial review of the Tribunal’s decision to the Supreme Court of British Columbia which was dismissed. Lastly, the Companies appealed the dismissal of their judicial review petition to the Court of Appeal for British Columbia (the “BCCA”) which was ultimately dismissed.

Analysis / Conclusion

The BCCA confirmed that it is well-established, both at common law and under the Employment Standards Act, that the existence of an employment relationship is not determined by a fixed test, but rather by the application of a number of relevant factors, such as control, ownership of tools and equipment, financial risk, opportunity for profit, etc., and there is no exhaustive list of factors.

Terms such as “employee” and “employer” will be interpreted in their statutory context, which means that, some factors may be given different weight in different statutory contexts and the result may be different conclusions as to the nature of the relationship for the purpose of different legislative regimes.

Most importantly, the BCCA explained that because the Employment Standards Act is a program type legislation (that is legislation which has been put in place to address social or economic problems) the provisions of the ESA would take priority over common law tests.

As the Supreme Court of Canada noted in McCormick v. Fasken Martineau Dumoulin LLP, 2014 SCC 39 (“McCormick”) and which the BCCA cited, an individual may be an “employee” in one statutory context but not in another. Which is what happened in this case where the Drivers were not considered employees for the purpose of the EI and CPP but were considered employees for the purposes of the Employment Standards Act.

A significant difference existed between the definition of “Employee” and “Employer” in the Employment Standards Act and the EI and CPP legislation. In particular, the definition of “Employer” in the Employment Standards Act placed greater emphasis on the factor of control which was not present in the EI and CPP legislation.

Meanwhile, the Tax Court gave greater weight to the subjective intentions of the parties as evidenced by the driver reporting income from self-employment, deducting his business expenses, and paying GST for 7 years.  Whereas, the Tribunal made it clear and the BCCA upheld that for the purposes of the Employment Standards Act the intention of the parties is only one factor that may be considered, and that it does not trump the reality of the nature of the relationship.

My Take

This decision does not change the law on the subject, but it is a great example of how the same worker can be considered an employee in some contexts but not in others.

Although the definitions of the Employment Standards Code (Alberta) are not as expansive as those in the Employment Standards Act of British Columbia, prior rulings in Alberta, such as AUPE v. Board of Governors University of Calgary, [2008] Alta. L.R.B.R. 129, indicate that the “control” factor is still important and will often decisively identify the employer-employee relationship for the purposes of the Employment Standard Code.

Lastly, a telling aspect of Beach Place was the recognition that the power imbalance between an employer and employee can result in employees feeling forced or required to file taxes as self-employed in order to work, which may impact the weight that is given to the evidence of common intent for the purposes of the Employment Standards Code.  The objective of the Employment Standards Code to protect employees will continue to direct the analysis of the relevant factors. 

Bow River Law provides these regular legal blog articles for the purposes of legal education and research for the public and the legal profession.  These articles should be considered general information and not legal advice.  If you have a legal problem, you should speak to a lawyer directly.

Patricia Gonzalez is a knowledgeable, skilled and experienced lawyer handling employment law, human rights (discrimination) and labour law matters.  Patricia Gonzalez is a lawyer at Bow River Law, based in Calgary but serving Alberta.