Not all persons who provide services in exchange for
compensation fall neatly within either the definition of
"employee" or "independent contractor".
Somewhere on the continuum between these two concepts lies the
"dependent contractor" – a person who works for him
or herself but provides services on a consistent and regular basis
to only one (or a limited number of) organizations. It
may come as a surprise to many that dependent contractors enjoy
some of the same rights as employees – most importantly, the
right to reasonable notice of termination.
For more than 20 years, Canac Kitchens contracted with the
Keenans, a husband and wife kitchen cabinet installation
team. Although the Keenans had originally been employees of
Canac, in 1987, the Keenans signed a new contract with Canac which
identified them as independent contractors. Although
the Keenans did do some work for one other company, the vast
majority of their revenues were from Canac.
In March 2009, Canac informed the Keenans that the business was
shutting down and their services were no longer needed. Since Canac
considered the Keenans to be independent contractors, they did not
provide any prior notice of the termination. The Keenans sued
Canac and claimed that as dependent contractors, they were entitled
to reasonable notice of termination.
In determining the nature of the relationship between the
Keenans and Canac, the court considered five factors: exclusivity,
control, investment/interest in tools, business risk or expectation
of profit, and "ownership" of the business.
The court found strong evidence of exclusivity in the
Keenan's service to Canac, despite the fact that they performed
some work for another company (with the knowledge of Canac). The
court also noted that the Keenans considered themselves to be loyal
The court also found that Canac exercised control over all
aspects of the services performed by the Keenans. Although the
contract between Canac and the Keenans was framed as an independent
contractor agreement, the court was of the view that the contract
was a tool by which Canac attempted to avoid employment
responsibilities to the Keenans, rather than truly reflecting the
nature of their relationship.
The Keenans owned the construction tools they used throughout
their work for Canac but the court found that by supplying an
office, phone and filing cabinet used by the Keenans in the course
of their services, Canac had supplied the Keenan's with tools
to carry out their services.
With respect to the business risk/profit consideration, the
court noted that the Keenans had worked almost exclusively for
Canac for 20 years, suggesting the Keenans were subject to little
business risk. As well, since Canac paid them a commission
per installation, there was no expectation of profit.
Last but not least, the court found that the business was
Canac's, not the Keenans's. The court indicated that public
perception was important in determining whose business it was: the
Keenans wore Canac shirts, had Canac business cards, and their
vehicles displayed the Canac logo. They were Canac to the
"outside world", demonstrating that the business was very
much Canac's and not their own.
Based the cumulative effect of the evidence, the court found
that the Keenans were dependent contractors and awarded them 26
This case is an important reminder that the nature of a service
relationship is not defined by the terms used by the parties
(employee or independent contractor) but by how the parties
actually conduct themselves. It is also a good example of the risks
associated with not implementing an enforceable contract: if Canac
had an enforceable contract with the Keenans which provided for
notice of termination, the result would have been very
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