In Keenan v Canac Kitchens Ltd., a Division of Kohler Ltd., the Court of Appeal upheld the 2015 determination the plaintiffs were dependent contractors entitled to 26 months’ reasonable notice. The decision highlights that exclusivity is a significant factor in determining whether a person is a dependent or independent contractor.
A husband and wife team worked for Canac between 1976 and 2009. Lawrence installed kitchen cabinets for seven years and thereafter became a supervisor. His wife worked as a foreman from 1983 to 2009. In 1987, the parties had a meeting in which Canac informed the Plaintiffs they were no longer employees and would carry on their work as independent contractors, working on a piecework basis for each unit installed. Canac presented the plaintiffs with an agreement reflecting the new arrangement. Marilyn signed it, but Lawrence did not. The plaintiffs received their Records of Employment which indicated they had quit their jobs. However, following the meeting, the plaintiff’s working relationship with Canac and duties did not change. They continued to work exclusively for Canac until 2007, at which point they started to do some work for a competitor. Canac closed its operations in 2009. Canac did not provide notice and took the position the plaintiffs were independent contractors. The plaintiffs brought an action seeking notice.
The Court of Appeal upheld the Superior Court of Justice decision and dismissed the appeal. The Court upheld the trial judge’s findings the plaintiffs were economically dependent on Canac as they had worked exclusively for Canac or at a high level of exclusivity for Canac for on average 28 years and were dependent contractors. The Court also upheld the trial judge’s findings the plaintiffs were each entitled to 26 months’ notice. The Court noted it was not appropriate to determine exclusivity on a “snapshot approach” and the full history of the parties’ relationship should be taken into account.
Lessons for Employers
Independent contractors should not be economically dependent on one employer due to either complete or a high level of exclusivity as this will weigh heavily in favour of a conclusion a worker is either a dependent contractor, or an employee.
Lessons for Employees
Do not sign an independent contractor agreement, unless sure the relationship is one of an independent contractor. Otherwise, should the contract be terminated, an independent contractor who is really a dependent contractor, or an employee, will have to first prove that they are and therefore entitled to termination notice.
See also our blog, “26 Months Notice Awarded to Dependent Contractors”.
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