Canada: Test For Employee Not Necessarily Limited To Single Test

Previously printed in The Lawyer's Daily, a LexisNexis Canada publication.

Some legal questions are never "answered" — no matter how frequently they are litigated, they come up again and again. In the world of employment law, few questions are as timeless (or important) as whether an individual is an employee or independent contractor.

The British Columbia Court of Appeal in Beach Place Ventures Ltd v. Employment Standards Tribunal 2022 BCCA 147 recently considered this question again and, although its conclusions did not break new ground, the decision serves as a good reminder of some important principles and deals squarely with a point that often causes confusion for clients — the test for "employee" and its various forms in different contexts.

Although much of the recent discussion of the line between employee independent contractor has focused on roles in the gig economy, this decision deals with taxi drivers (a group that has already had its fair share of litigation on the employee question). The relationship does have its complexities: the shareholders of one of the appellants, Black Top Cabs Ltd., are the owner-operators of the taxis while the corporation holds the taxi licences. Black Top is also the sole shareholder of another corporation, Beach Place Ventures Ltd., that provides administrative, accounting and dispatch services. At issue are a group of individuals who either lease or pay a fee to the shareholders to drive the taxis for a set period of time and the question of whether they are employees of Black Top and Beach Place or independent contractors.

Summary of case

This case started its life as an employment standards complaint and worked its way up to the Court of Appeal. All decision makers prior to the Court of Appeal determined that the individuals in question were employees.

In support of the argument that the individuals were independent contractors, the appellants relied on various arguments including that the decision was res judicata as the Tax Court of Canada had previously determined that one of the individuals was not an employee. Black Top and Beach Place argued that the Tax Court decision was binding and that the Employment Standards Tribunal ought to have followed it. The Court of Appeal disagreed, siding with the Employment Standards Tribunal and its determination that although the term "employee" is used in both the tax and employment standards regimes, the statutory contexts are different, and thus it is possible for an individual to be an employee for the purposes of one regime without necessarily also being an employee in the other. This point is an important one because in the employment world there are many statutory regimes at play, and it is crucial to be alive to their nuances and the slight variations on the meaning of "employee" (or similar concepts like "worker").

The second key argument Beach Place and Black Top relied on was their concern that the tribunal had relied on an "expansive" definition of employee, whereas it ought to have articulated a "clear and coherent" definition. In other words, the appellants were expecting that the legal test for employee would provide bright lines that are easily understood and applied in various contexts.

Decision

Unfortunately, the law has been (and continues to be) that there is no single test for employee. The courts and other decision makers have recognized that there are endless relationship structures that will need to be considered by any legal test and, given that the question is a factual determination based on the specific context, a non-exhaustive list of factors is more appropriate than a set formula or precise legal test.

While neither of these conclusions will be a surprise for those who practise in this area of law, they are concepts that are often challenging for clients. Shouldn't "employee" mean the same thing whenever it's used? If the employee-independent contractor question is so important, shouldn't the test be easy to understand and provide clear guidance, particularly given that those making the decision at first instance (i.e., employers and employees) normally do not have legal training?

Takeaway

The Court of Appeal, relying on established authority, has sent the message that the law will continue to trade clarity and consistency for a fact-specific, contextual approach that more accurately responds to the unique and diverse relationships that have to be considered by employment standards tribunals, courts and all the other decision makers involved in interpreting the meaning of "employee."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.