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Citation: 2005TCC173
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Date: 20050408
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Dockets: 2004-671(EI)
2004-672(CPP)
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BETWEEN:
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DIRECT CARE IN-HOME HEALTH SERVICES INC.,
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Appellant,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Hershfield J.
FACTS
[1] The Appellant appeals the
Minister's determination under the Employment Insurance
Act and Canada Pension Plan that Ms. A.B., a
registered practical nurse (the "Worker"), was an
employee of the Appellant as opposed to an independent contractor
during the period January 2001 to December 31, 2002. This is the
sole issue in this appeal.
[2] The Appellant's business
during this period was to provide home care/nursing services to
home care clients of the Community Care Access Centres of Ottawa
(the "CCAC clients") and to clients of its own whose
families had engaged the Appellant to provide home care to a
family member ("private clients").
[3] The Appellant called two
witnesses, Mr. Blais and Ms. Lavoi. Mr. Blais is the principal
shareholder of the Appellant company and Ms. Lavoi is the
Appellant's current director of nursing services. Prior to
serving in this position Ms. Lavoi worked for the Appellant for
six years as a registered nurse. She was a knowledgeable witness.
While Mr. Blais testified extensively at the hearing, he did not
have first hand knowledge of the day-to-day activities of the
Appellant. As well, he relied heavily on his own conclusions
drawn from his own answers to questions posed on a form used by
the CRA in determining the status of the Worker. This aspect of
the evidence was not particularly helpful but I did not find him
unreliable in areas of his testimony that pertain to the general
mode of the Appellant's operations much of which was
corroborated by either or both of Ms. Lavoi and the Worker who
was called by the Respondent.[1]
[4] During the period under review the
Appellant had engaged 30 or more health care workers to assist it
in performing services for CCAC clients and private clients. By
"engaged" I mean that it had a pool of health care
givers (primarily registered nurses and registered practical
nurses) under contract. The Worker was one such nurse. Her
written contract (the "Agreement") with the Appellant
appears to be a standard form of contract used by the Appellant
to engage the services of its pool of workers. It identifies the
Worker as a non-employee contractor and frames a working
relationship that genuinely lends itself to the engagement of
independent contractors which was the clear intention of the
Appellant. Clauses 1 - 3 of the Agreement in particular
illustrate this framework. They provide as follows:
1. Terms of Reference
The contractor agrees to perform services from time to time
for Direct Care Health Services, thus, the parties mutually agree
to enter into the following contract. The Services to be provided
are specified under the Compensation section 2-a.
2. Compensation
Direct Care Health Services agrees to pay the contractor the
following:
(a) The amount of
compensation will vary with the level of care provided. Each
level of care has been identified with the appropriate
compensation to the right. Therefore the caregiver will be paid
according to the level of care and the maximum amount per hour as
outlined below.
1. Care Level I
___________
2. Care Level II
___________
3. Registered Practical
Nurse
___________ (checked)
4. Registered
Nurse
___________
5. Foot Care
___________
An invoice/payment request is required before payment will be
issued.
(b) The contractor is not
an employee of Direct Care Health Services and as such you are
responsible for reporting your own income to Revenue Canada as
well as paying your own CPP, EI, and Income Tax.
3. Relationship
During the course of this contract, the contractor shall not
be an official representative nor a regular employee of Direct
Care Health Services. This contract is an agreement that Direct
Care Health Services shall maintain the contractor's name on
our roster for specific services provided. There is no guarantee
of regular hours of work provided by this contract. During the
course of performing under this contract, the contractor shall
abide by the Policies and Procedures of Direct Care Health
Services set out in the Orientation Manual.
[5] The Worker's testimony was to
the effect that she accepted that she was not an employee on the
basis that the Appellant required her to do so. To say she was
and is indifferent to being designated an independent contractor
versus an employee would be a fair reflection of her testimony on
the point.[2]
[6] The following is a summary of the
evidence presented at the hearing:
- when she first
applied for work the Worker understood that she was subject to an
initial probation period to satisfy the Appellant that she was
suitable to join the pool of nurses under contract to the
Appellant;
- when she first
started, the Worker received a procedures manual prepared by the
Appellant for its workers. Nothing in her testimony however
contradicted Mr. Blais' testimony that the manual dealt only
with administrative procedures and gave no substantive direction
as to how nurses were to perform their services with clients;
- the Worker
acknowledged that she accepted engagements under the Agreement on
the basis of being paid on an hourly rate as set by the Appellant
and that she received increases from time-to-time based entirely
on the Appellant's internally established rate
structures;
- the Worker wore an
identification badge for the first day or two of each assignment
identifying herself as someone from "Direct Care";
- the Appellant
offered occasional in-service training sessions to its pool of
workers. A guest speaker was usually invited to the sessions. The
Worker often attended the sessions, regarding them as useful in
terms of fulfilling the continuing education requirements of her
nursing association (requirements she referred to as
"Reflections"). Contrary to the testimony of Mr. Blais,
to the effect that these sessions were intended for a wider
audience to promote the Appellant's business, the Worker
testified that in her experience these sessions were only
attended by nurses under contract with the Appellant;
- the Worker said
she was afforded the choice of which engagements to take. She
could say no to an engagement for virtually any reason. She was
under no obligation to make herself available at any particular
time or for any particular type of work. She could try an
engagement for a day or two and decide then whether or not she
wanted to continue. Mr. Blais confirmed that workers could turn
down work for virtually any reason, such as: the client was a
smoker, the client had a pet, the required hours were
inconvenient or the location of the client's home was not
convenient;
- the Worker was
expected, on a regular basis (every Sunday or Monday), to advise
of her availability for the week and the type of engagement she
was willing to take;
- there was no
restrictive covenant or non-compete obligation whatsoever either
in the Agreement or in the Worker's understanding of the
arrangement. A worker was not required to be available to service
the Appellant's contracts and was free to provide similar
services to other companies or clients directly;
- once an engagement
was accepted, the Worker confirmed that there was an expectation
that it would be carried out on the basis accepted. However, it
is clear from the Worker's evidence, as well as from the
other witnesses, that temporary or permanent withdrawals from an
engagement were acceptable. The Worker could not assign another
worker to an engagement from which she was withdrawing, even
temporarily;
- from June 2001,
when the Worker first contracted with the Appellant, the
Worker's engagements were with terminally ill clients and
varied in hours and duration. However, since October 2002 she has
continuously served on a regular shift basis with one long-term
CCAC client. The Worker's engagement with this client was
regarded by her as a committed ongoing long-term engagement;
- in order for her
to perform services for the Appellant, the Worker required a
vehicle, gloves, stethoscope and a blood pressure pad. The
vehicle was provided at her expense without allowance or
reimbursement by the Appellant. The Agreement expressly provided
that transportation to and from assignments was the
responsibility of the Worker. While the Agreement provides that
equipment and supplies are to be provided by the Appellant, the
evidence is that such provision was not given effect. Supplies
such as medical dressings and equipment as may have been required
were supplied by CCAC or the families of private clients, while
the stethoscope, gloves and blood pressure pad were provided by
the Worker;
- the
Appellant's insurance covered the Worker for professional
liability respecting work performed under her contract with
Direct Care;
- the Worker's
function in attending to clients was to take vital signs,
administer medication and to attend to the medical and health
care needs of clients as prescribed by CCAC or by the physicians
of private clients. That is, tasks to be performed by the Worker
were structured by a third party with, in some cases, the input
of the Appellant but almost always without the input of the
Worker. The performance of those tasks was almost always the
exclusive jurisdiction of the Worker once she was engaged by the
Appellant to perform those tasks;
- the Worker was
largely unsupervised in the performance of her duties with a
client. Once or twice per year or at the commencement of an
engagement, a supervisor employed by the Appellant would attend
with the Worker at a client's home. The Worker's
testimony was clear that such attendances were not to supervise
work but rather to assist and support her in areas of care that
were not familiar to her. Although her assigned duties were
dictated to her, she was left on her own in the performance of
those duties;
- the Worker
prepared daily reports on forms provided by the Appellant, which
were left, on a current basis, at the home of the client to
ensure that the client's current status would be available to
any other medical professionals attending to the client. Reports
were then turned in to the Appellant as the entity responsible
for the maintenance of the client records. A supervisor employed
by the Appellant would review the reports. This, it seems,
maintained the Appellant in a position to report, as would be
required under its contractual arrangements, to CCAC or to the
family or physician of private clients;
- the
Appellant's invoices that were used to bill CCAC and private
clients were completed by the Worker and used by the Appellant to
account to the Worker for her time. The invoice showed hours of
work performed by the Worker (on behalf of the Appellant) and was
verified by the client's signature. The invoice would be sent
by the Appellant to the CCAC or private clients for payment of
its fees. The Worker would be paid by the Appellant for the hours
indicated on this invoice.
AUTHORITIES
[7] I turn now to an analysis of case
law. The leading case on the issue before me is 671122 Ontario
Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983
("Sagaz"). In that case the Supreme Court of
Canada expressly approved the test set out by the Federal Court
of Appeal in Wiebe Door Services Ltd. v. Canada (Minister of
National Revenue), [1986] 3 F.C. 553. Writing for the Court,
Major J. stated as follows at paragraphs 47 and 48:
[47] Although there is no universal test to determine whether
a person is an employee or an independent contractor, I agree
with MacGuigan J.A. that a persuasive approach to the issue is
that taken by Cooke J. in Market Investigations, supra. The
central question is whether the person who has been
engaged to perform the services is performing them as a person in
business on his own account. In making this determination, the
level of control the employer has over the worker's
activities will always be a factor. However, other factors to
consider include whether the worker provides his or her own
equipment, whether the worker hires his or her own helpers, the
degree of financial risk taken by the worker, the degree of
responsibility for investment and management held by the worker,
and the worker's opportunity for profit in the performance of
his or her tasks. (emphasis added)
[48] It bears repeating that the above factors constitute a
non-exhaustive list, and there is no set formula as to their
application. The relative weight of each will depend on the
particular facts and circumstances of the case.
[8] Sagazwas followed by the
Federal Court of Appeal in Wolf v. The Queen, 2002 D.T.C.
6853 ("Wolf"). All three appellate justices in
the case delivered reasons concurring in result. Of particular
importance to the present case are comments made by Justice
Desjardins in respect of the "whose business is it"
test which in my view is a rephrasing of the "central
question" posed in Sagaz and comments made by
Justices Noël and Décary in respect to the weight to
be given to the parties' intentions. Justice Desjardins'
comments in respect of the "whose business is it" test
at paragraph 93 are to the effect of asking whether, from the
worker's perspective, the worker has a business that stands
independently from the business of the party engaging the
services of the worker. As to the weight to be given to the
parties' intentions Noël J.A. stated at page 6870,
paragraph 122:
[122] ... In my view, this is a case where the
characterization which the parties have placed on their
relationship ought to be given great weight. I acknowledge that
the manner in which parties choose to describe their relationship
is not usually determinative particularly where the applicable
legal tests point in the other direction. But in a close case
such as the present one, where the relevant factors point in both
directions with equal force, the parties' contractual intent,
and in particular their mutual understanding of the relationship
cannot be disregarded.
This view was echoed by Décary J.A. at paragraph
120:
[120] In our day and age, when a worker decides to keep his
freedom to come in and out of a contract almost at will, when the
hiring person wants to have no liability towards a worker other
the price of work and when the terms of the contract and its
performance reflect those intentions, the contract should
generally be characterized as a contract for services. If
specific factors have to be identified, I would name lack of job
security, disregard for employee-type benefits, freedom of choice
and mobility concerns.
[9] In Poulin v. Canada, [2003]
FCA 50 ("Poulin"), the Federal Court of Appeal
was charged with determining whether the Appellant had engaged
private health care providers as employees or as independent
contractors. The FCA went through each of the well-established
tests and concluded as follows at paragraphs 27 and 28:
[27] ... the tests developed by the courts to differentiate a
contract of employment from a contract of services prove to be of
little use in the particular context of this case. The services
rendered to the applicant during 1999 and the conditions in which
they were rendered reveal a supply of services that is as
compatible with one resulting from a contract for services or of
enterprise as it is with one emanating from a contract of
employment. That being said, as our colleague Mr. Justice
Décary noted in Wolf, supra, at paragraph
117, these tests are simply factors to be considered in the
determination of what "is the essence of a contractual
relationship, i.e. the intention of the parties". And as he
also says, "one ends up in the final analysis, in civil law
as well as in common law, looking into the terms of the relevant
agreements and circumstances to find the true contractual reality
of the parties": ibid., at para. 113.
[28] This leads me to examine the intention of the parties, in
order to determine the overall relationship that they wished to
maintain between themselves.
ANALYSIS
[10] These authorities suggest two
approaches to the resolution of a case like the present one.
Firstly, applying the tests in Wiebe Door, if a clear
classification of the worker is determinable, that is likely the
end of the matter. Secondly, if a clear classification is not
determinable by applying these tests, the existence of an
independent worker's business and the intentions of the
parties must be considered. I will begin the analysis then with
the tests in Wiebe Door.
Control
[11] Analysis of this factor involves a
determination of who controls the work and how, when and where it
is to be performed. If control over work once assigned is found
to reside with the worker, then this factor points in the
direction of a finding of independent contractor; if control over
performance of the worker is found to reside with the employer,
then it points towards a finding of an employer-employee
relationship.[3]
However, in times of increased specialization this test may be
seen as less reliable, so more emphasis seems to be placed on
whether the service engaged is simply "results"
oriented; i.e. "here is a specific task - you are engaged to
do it". In such case there is no relationship of
subordination which is a fundamental requirement of an
employee-employer relationship.[4] Further, monitoring the results, which every
engagement of services may require, should not be confused with
control or subordination of a worker.[5]
[12] In the case at bar, the Worker was free
to decline an engagement for any reason, or indeed, for no reason
at all. She could leave a client and still be engaged with
another more to her liking. She was free to do other work as and
when she pleased. Moreover, although nursing care tasks were
offered to her, there was no promise of that and she was not
supervised in her performance of those tasks. Each task offered
was a results oriented task from the Appellant's perspective.
The fact that the Appellant could offer such tasks from time to
time and to some extent monitor performance does not militate
toward a finding of an employee-employer relationship. As in D
& J Driveway, where there was not a sufficient
relationship of subordination between the company and drivers to
warrant a conclusion that a contract of employment existed, there
is not a sufficient relationship of subordination in the case at
bar to warrant a conclusion that the relationship of the parties
is that of employee-employer. In D & J Driveway
specific delivery tasks were available to drivers who could agree
or refuse to make deliveries when called upon. When drivers
agreed to make a delivery no control was exercised over the way
in which they carried out their duty. Similarly in Wolf,
Justice Desjardins noted that a link of subordination had not
been created where the worker, a free-lance mechanical engineer
hired on a one-year renewable contract, was assigned tasks over
which the worker was the "master".[6] As in these cases, I do not see
the Worker, in the case at bar, as being in a subordinate
relationship with the Appellant as is required to find a contract
of service. That is, the control test points toward a finding of
an independent contractor relationship.
Tools and Equipment
[13] The question to be asked in relation to
this factor is who, of the employer or the worker, owns the
assets or equipment that is necessary to perform the work. This
factor points to a finding of independent contractor if it is the
worker who controls the assets or equipment. Conversely, a
finding of employee is likely if it is the employer who controls
them.[7]
[14] In this case, the Worker required
gloves, stethoscope and a blood pressure pad. As well, as
expressly provided in the Agreement, the Worker was responsible
for transportation to and from assignments. To this end the
Worker maintained a vehicle at her own expense.
[15] The Agreement also provides that the
Appellant would provide the Worker "with supplies and
equipment the Agency (Direct Care Health Services) feels is
necessary to carry out the assigned work". However, the
evidence indicates that this provision was not given effect, and
that all supplies such as medical dressings and equipment were
supplied by CCAC or the families of private clients. Here, then,
we have a situation where some of the tools and equipment were
provided by the Worker and the remainder by a third party. The
Appellant did not provide the Worker with any tools or equipment
other than the invoicing and patient reporting forms. While
giving this factor considerable weight in a case as this is
clearly not appropriate, it does not in any event point to the
Appellant as the party having control over, or having made the
investment in, the equipment necessary for the carrying out of
the Worker's activities.
Risk of Loss/Opportunity for Profit
[16] This factor examines the worker's
potential of profit or loss. An independent contractor normally
assumes the risk of loss and chance for profit resulting from the
performance of work, while in the case of an employee it is the
employer who bears that burden and has that opportunity.[8]
[17] The Respondent argues that the Worker
bears essentially no expenses and receives compensation fixed by
an hourly rate and that this precludes the Worker from having any
risk of loss or chance of profit. The Respondent also argues that
the Appellant's carriage of the Worker's third party
liability insurance points to an assumption of risk akin to that
of an employer. Against these arguments are of course the
standard arguments that hourly rate payments cannot be
determinative of the nature of the relationship and that the
insuring of independent contractors is as much in the interests
of the party retaining their services as it is for an employer to
insure the acts of employees. While the Appellant providing the
insurance coverage reduces the Worker's risk of loss it
cannot, in my view, be seen as an overriding factor in
classifying the relationship particularly in cases such as this
where the chain of liability puts the Appellant first in line
contractually as the defendant in an action. The benefit to the
Worker is incidental and of marginal relevance as a single
factor.
[18] As well, the Respondent argues that the
Worker not negotiating her own pay rate increases, but rather
accepting the compensation scheme as set by the Appellant, is not
reflective of an activity carried out for profit. Against this,
however, is the Worker's apparent satisfaction that her
compensation rates were competitive. It seems to me she simply
saw no reason to negotiate for more. This cannot deter from a
finding that she was an independent contractor if other factors
encourage that finding. Furthermore, in terms of risk, it is
relevant that the Worker does not enjoy the type of job security
that is normally inherent in employment. She has no: health
insurance benefits, pension plan, union protection, assured
hours, advancement structure or job security of any type. As
noted earlier in these Reasons, Décary J.A. in
Wolf, referring to factors indicating an independent
contractor relationship, commented that: "If specific
factors have to be identified, I would name lack of job security,
disregard for employee-type benefits, freedom of choice and
mobility".
[19] In addition, the fact that the Worker
was able to decline an engagement for any reason must not be
overlooked. The Worker in that sense had control over how much
money she could earn to an extent far greater than that exercised
by most employees. The Worker could increase her earnings and
chance of profit by accepting more engagements from the
Appellant. On the other hand, since she was not assured any
hours, she had a risk that some expenses such as vehicle expenses
could exceed income. Of course many employees might be in similar
circumstances so I would not put too much emphasis on this factor
in characterizing the nature of the relationship.
[20] While applying the tests in Wiebe
Door on the basis discussed above justifies a finding that
the Worker is an independent contractor, I will continue the
analysis in light of the authorities cited above which in close
cases have considered the issue from the perspective of whether
the Worker is in business for her own account and from the
perspective of the parties' intentions. [9]
Whose Business Is It?
[21] In applying this test the central
question is that posed in Sagaz which is whether the
person who has been engaged to perform the service is performing
the service as a person in business on his own account. While the
answer to this question is said in that Supreme Court case to lie
in the application of the four tests laid out in Wiebe
Door there is a tendency to look at the worker's activity
in isolation to see if it constitutes a business. If not, how can
it be said that the worker is in business for his own account?
Looking at the Worker's activity from the worker's
perspective,[10]
in the case at bar, may suggest that the Worker has no business
per se. While trappings alone are not determinative of
there being a business it is notable that in this case the Worker
does not operate under a business name, does not have an office
(home office included) or a list of clients, does not provide her
own forms and prepares no separate invoices for her services. All
of these factors point to there being only one business: that of
the Appellant. Indeed the Worker herself does not profess to have
a business except as might necessarily be inferred from her
contractual arrangement as written and performed.
[22] One ought not, however, fall into the
trap of thinking that only that which has the trappings of a
"business" qualifies as such for the purposes of this
analysis. I refer to paragraph 13 of D & J
Driveway:
... It is important to guard against a reflex of thinking
solely of a business corporation or an organized commercial
undertaking when one is dealing with work which is done or
services which are provided other than under a contract of
employment. The examples of electrical, plumbing or building
contractors immediately spring to mind in such a context.
However, there is a whole range of services which are offered
under a contract for services. In fact, article 2098 of the Civil
Code of Quebec was very careful to place on an equal footing a
"contract of enterprise" and a "contract for
services" and to describe as a "contractor" the
person who performs a contract of enterprise and a "provider
of services" the person who carries out a contract for
services.
[23] Although the Civil Code of
Quebec does not apply in this case, I nonetheless find the
words of Letourneau J. instructive. In the present case, the
Worker was free to accept or refuse or leave engagements as she
pleased and was free to contract with agencies other than the
Appellant, so long as she did not solicit the Appellant's
customers for any work outside of the Agreement. In addition, the
Worker provided many of her own tools and was free to perform her
duties with no supervision. That is enough, in my view, to
warrant a finding that the Worker had a business as did drivers
in D & J Driveway. The Appellant and the Worker are
two separate persons each with a distinct undertaking. The
undertaking of the Appellant is to find clients, find contractors
to perform the tasks required by the clients to be performed and
coordinate the fulfilment of clients' needs. The performance
of the tasks themselves is contracted out to workers whose
undertakings are to perform such tasks as and when they
agree.
[24] While I believe this part of the
analysis confirms and supports my earlier conclusion which is
that the Worker in the case at bar is properly classified as an
independent contractor, I will, for the sake of completeness,
consider the parties' intentions.
Intentions
[25] Although the parties' intentions
should not be regarded as determinative, they can be helpful in a
close case.[11]
That is, if one were to conclude on a review of the evidence as a
whole that this is a close case where the relevant factors point
in both directions with equal force and that the mutual
understandings of the parties must therefore be regarded and
considered, how would this case be resolved?
[26] I have no difficulty finding that the
Appellant intended to hire the Worker as an independent
contractor. This much is clear from the testimony of Mr. Blais
and from the terms of the Agreement. As to the intention of the
Worker, I begin by noting that it is not as easily discernible as
that of the Appellant. The Worker's testimony seemed to
indicate that the matter did not concern her. She seemed
indifferent to the classification. As much as it might be said
that she never really thought of herself as an independent
contractor, it cannot be overlooked that she never took on the
role performed by her thinking that she was an employee. To the
contrary, she took on the role knowingly agreeing to the
relationship intended by the Appellant. Moreover, I am compelled
to find that she must have had at least some minimal intention to
operate as an independent contractor in light of the fact that
she agreed to an arrangement whereby she was not entitled to any
employee benefits whatsoever and without the apparent protection
of labour laws in terms of such benefits or job security. At the
hearing she evidenced no concern as to seeking relief from this
state of affairs knowing full well that it was, and is, the
arrangement she willingly agreed to. Her intention was and is to
carry on her undertaking as required under the Agreement.
CONCLUSION
[27] Taking all factors into account then,
it is consistent in this case to regard the Worker's
undertaking as one engaged in for her own account as an
independent contractor. Accordingly the appeals are allowed.
Signed at Ottawa, Canada, this 8th day of April 2005.
Hershfield J.
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