Canada: Who Is My Employer?

Earlier this year, the Alberta Court of Appeal was required to consider whether the common law definition of "employer" should be expanded in the context of the Alberta Human Rights Act (the "Act"), where a worker who failed a drug test required by Syncrude was denied access to a Syncrude worksite in Fort McMurray. The case has implications particularly for companies that use contractors and have a relatively high level of control over the contractors' employees.

The case is Lockerbie & Hole Industrial Inc. v. Alberta (Human Rights and Citizenship Commission, Director), 2011 ABCA 3. The worker's direct employer was not Syncrude, but Lockerbie & Hole, an arm's-length subcontractor performing construction work on the Syncrude site. The question before the Court was whether Syncrude was also the worker's employer for the purposes of the Act. While recognizing that co-employment was possible in certain circumstances, the Honourable Mr. Justice Slatter, writing for the Court, held that the facts could not support a finding of co-employment in this case.

The worker, Donald Luka, had brought a complaint against both Syncrude and Lockerbie & Hole to the Alberta Human Rights and Citizenship Commission, under the section of the Act prohibiting discrimination by an employer. Mr. Luka had tested positive for marijuana but denied being a regular user. He claimed that the drug-testing policy and the way it was administered treated him as if he had a drug addiction (which would amount to a disability) although he did not. Therefore his claim rested on his being "perceived" to have a disability, and on a lack of reasonable accommodation by his employer. The human rights panel dismissed Mr. Luka's claim, finding that he had failed to show a disability or perception of disability, and thus had failed to establish a prima facie case.

However, on the question of whether an employment-based claim against Syncrude could even be supported in this case, the panel found that Syncrude was indeed Mr. Luka's employer for the purposes of the Act. It did so following other cases in which the concept of employment had been expanded to include the "utilization" of a worker's services, even in the absence of a conventional employment relationship – and also because it was Syncrude that controlled the pre-access drug testing requirement.

Despite having ultimately defeated the discrimination claim, both Syncrude and Lockerbie & Hole appealed the employment aspect of the panel's decision. The initial appeal, heard by the Honourable Mr. Justice Clackson of the Court of Queen's Bench, overturned the Commission's finding that Syncrude was Mr. Luka's employer, concluding that an employment relationship between Syncrude and Mr. Luka did not exist in the absence of an express or implied contract between the two. The Director of the Commission subsequently appealed to the Court of Appeal.

The Court of Appeal noted that

the courts have repeatedly confirmed that remedial statutes such as human rights legislation require a flexible and contextual interpretation

and that

many remedial statutes intend a wider meaning of "employment" than existed at common law.

The Court accepted that there may be times where an employment relationship exists in spite of there being no direct contract between a company and a worker, and also that "co-employment" was indeed a possibility for the purposes of the Act. However, the Court also made it clear that

it will be rare that the concept can be extended so far as to encompass employment by two different parties in circumstances such as appear on this record.

The Court set out a non-exhaustive list of factors to consider. For the general question of whether an employment relationship exists under the Act, the factors listed were:

  • whether there is another more obvious employer involved;
  • the source of the employee's remuneration, and where the financial burden falls;
  • normal indicia of employment, such as employment agreements, collective agreements, statutory payroll deductions, and T4 slips;
  • who directs the activities of, and controls, the employee, and has the power to hire, dismiss, and discipline;
  • who has the direct benefit of, or directly utilizes, the employee's services;
  • the extent to which the employee is a part of the employer's organization, or is a part of an independent organization providing services;
  • the perceptions of the parties as to who is the employer; and
  • whether the arrangement has deliberately been structured to avoid statutory responsibilities.

For the specific context of where there may be a situation of co-employment, the Court listed the following additional factors:

  • the nexus between any co-employer and the employee, including whether there is a direct contractual relationship between the complainant and the co-employer;
  • the independence of any alleged co-employer from the primary employer, and the relationship (if any) between the two;
  • the nature of the arrangement between the primary employer and the co-employer, e.g. whether the co-employer is merely a labour broker, compared to an independent subcontractor; and
  • the extent to which the co-employer directs the performance of the work.

In the case before it, the Court of Appeal found these factors to demonstrate that Syncrude was not Mr. Luka's employer for the purposes of the Act. The Court stated,

His relationship with Syncrude was too remote to justify a finding of employment, even under the expanded meaning given to that term in human rights legislation. It is Lockerbie & Hole that must ensure that Mr. Luka's rights under the Act are respected ... .

The Court further stated,

The Alberta Act likewise only prohibits discrimination in certain select relationships, such as "employment" and "providing services to the public". "Access to private property" is not a regulated activity. As a last word, the Court noted that a finding of co-employment under the circumstances of this case might lead to an absurd result:

It is difficult to see how one could contain the concept of multiple employers in this situation. If Mr. Luka worked for one of Lockerbie & Hole's subcontractors, he presumably would have five employers: the subcontractor, Lockerbie & Hole, Marsulex, Kellogg Brown and Root, and Syncrude. If he was further down the contractual chain, he might have even more employers. This is not a result the Legislature should be taken to have intended by the use of the word "employer".

In the result, the Alberta Court of Appeal's decision means that in many cases companies can breathe easy, as arm's-length contracts and working relationships should be seen for what they are, and the mere utilization of a worker's services does not in itself make that worker an employee. Of course, there may be valid business reasons for a company to want greater oversight and control of a worker even where the worker provides services through a contractor. Accordingly, companies assessing their risk vis-à-vis employment-based human rights claims may find themselves required to consider the above factors with regard to relationships with workers not directly employed by them.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2011 McMillan LLP

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