Mistake to ignore reality of employee role, accommodation request
In recent posts on his Canadian HR law blog, Ontario employment lawyer Stuart Rudner discussed why treating your worker as an independent contractor does not necessarily mean they are one, and why reinstatement may be a viable remedy in certain cases of dismissal.
As Rudner, founding partner with Rudner MacDonald LLP, cautions, even if both parties choose to define the employment relationship as one that is independent, courts, tribunals and government agencies will look beyond that label to assess the reality of the circumstances, examining whether the worker is in business for themselves or is actually an employee of the organization.
“Too many ‘contractors’ are really employees in all but name; organizations that choose to treat employees as contractors unwittingly expose themselves to liability for damages, fines and penalties,” writes Rudner.
“Many individuals want to be treated as contractors because of the perceived tax benefits. Unfortunately, many organizations go along with this, seeing potential savings with respect to items such as employment insurance premiums and Canada Pension Plan premiums, but failing to consider the potential risks and liabilities.
"And, in many cases, individuals who are quite happy to be treated as contractors change their views when they discover they do not have all of the protections that employees receive, particularly the right to significant notice of dismissal or severance pay. It is not unusual for a contractor who has been ‘let go’ to file a wrongful dismissal claim and allege she was truly an employee,” he adds.
As Rudner warns, workers who are treated as contractors can become disenchanted when they realize that they are not entitled to statutory holidays, vacation, overtime pay or other benefits that employees receive.
Historically, he explains, several different tests have been used in order to distinguish contractors from employees, and recently, a third category of “dependent contractors” has also been recognized.
However, as Rudner explains, in some cases, he has seen individuals who have either a title on the organization chart, a corporate office, an assistant, benefits, are subject to performance reviews and are listed on the corporate website as a member of the “team.”
“To suggest that they are in business for themselves and not integrated into the organization is preposterous,” he writes.
As such, Rudner advises, “it is a mistake to treat an employee as a contractor. Sometimes, organizations justify this approach by saying they want to limit their severance obligations. This can be achieved through employment agreements. Of course, some workers are truly independent and should be treated as such. But as a wise man once said, ‘If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.’ Don’t try to dress your ducks up as sheep and hope that courts, tribunals, or the Canada Revenue Agency will be fooled.”
In cases of dismissal, although it makes sense for most terminated employees to focus on seeking compensation, Rudner explains that there are limited circumstances where reinstatement may be a viable remedy.
“These include ones involving unionized employees, individuals who have suffered a reprisal in contravention of s. 50 of the Occupational Health and Safety Act and, as the Ontario Court of Appeal recently confirmed, in the event of discrimination pursuant to the Human Rights Code,” he writes.
For example, in the recent case of Hamilton-Wentworth District School Board v. Fair, the Ontario Court of Appeal upheld a human rights tribunal's decision to reinstate an employee where there had been a failure to accommodate her disability, almost 15 years after the employee had been terminated from her position, Rudner explains.
The employee suffered from a generalized anxiety disorder and was diagnosed with depression and post-traumatic stress disorder. After 13 years with her employer, she took a medical leave of absence in 2001. When she wanted to return to work, however, the employer claimed that it did not have a position to put her into. Meanwhile, in April 2004, the employee’s long-term disability benefits were cut off, as she was deemed to be capable of working.
In July 2004, her employment was terminated.
She then brought a claim before the Human Rights Tribunal of Ontario (HRTO) alleging a failure to accommodate and seeking reinstatement. The HRTO agreed with her, ordering that she be reinstated and awarded her lost wages, and the decision was subsequently upheld by the Ontario Divisional Court. The decision was appealed to the Ontario Court of Appeal, which Rudner says clarified the broad nature of the duty to accommodate and confirmed that reinstatement is an appropriate remedy in such circumstances.
“In particular, the Court of Appeal in this case confirmed that the purpose of accommodation is to ensure that persons who are fit to work are not unfairly excluded from employment.
“It is well-recognized that accommodation can involve modified duties, modified hours, transfers, and other efforts to find a way to allow an employee with a disability to participate in the workforce. The duty is to accommodate to the point of undue hardship, which is an elusive concept that is often hard to define. It will depend on the nature, size and budget of the employer, safety concerns, and other factors,” writes Rudner.
In this case, he says, the Court of Appeal confirmed that the duty can, in the right circumstances, require transferring the employee or even creating a surplus position.
“In ordering reinstatement, the Court of Appeal confirmed that it is a reasonable remedy in such cases, even when such a lengthy amount of time has passed,” he adds. Of course, in considering whether reinstatement is viable, a court or tribunal will also have to bear the relationship between the parties in mind.
“The duty to accommodate is an issue that employers struggle with. This case should serve as a reminder that it is a broad duty, and that failure to consider appropriate accommodation can result not only in an award of damages, but in reinstatement. Every request for accommodation must be properly assessed and given fair consideration,” writes Rudner.