Date: 20010419
Dockets: 2000-729-EI,
2000-2833-EI
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.,
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Dockets: 2000-730-CPP,
2000-2834-CPP
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.,
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor
Judgment
Rip, J.T.C.C.
[1]
These are appeals from an assessment dated January 17, 2000 and
determinations by the respondent dated December 9, 1999 that,
with respect to the assessment, Peter Cole, Steven Kohuch,
Sean Miller, Chris Rankin, Gavin Rankin, Gerald Schulz,
Evan Titchkosky and Hospacia Vissarra and, with respect
to the determination, Peter Marschall, were employed by the
appellant under contracts of service during various periods in
1999 and were therefore employees of the appellant employed in
pensionable and insurable employment pursuant to the Canada
Pension Plan ("Plan") and the
Employment Insurance Act ("Act")
respectively and, therefore, the appellant is liable for
contributions as an employer under the Plan and for
premiums as an employer under the Act. The appeals with
respect to Mr. Marschall relate to whether he was an
employee of the appellant and was engaged by the appellant in
pensionable and insurable employment during the period of May 5,
1999 to July 26, 1999.
[2]
The appellant, operating under the name "Accurate
Alarm", is a corporation carrying on the business of
selling and installing commercial and residential security alarm
systems to customers at various locations in Manitoba.
Mr. Lawrence Rosenberg, General Manager and President
of the appellant, stated that in 1999 the appellant installed 70
to 100 systems each month.
[3]
Typically, when a customer asks for an estimate a salesman will
visit the site and quote an estimate based on the type of
equipment required and time. An hourly rate is based on a formula
of how long an installation will take. The appellant engages
workers to install the systems. These workers, the installers,
are the people whose status is to be decided in these
appeals.
[4]
The installers, sometimes referred to by Mr. Rosenberg as
subcontractors, learn of the availability of work with the
appellant by word of mouth or leave their names at the
appellant's suppliers. The appellant also advertises for
workers in local newspapers. No license is required to work in
Manitoba as an installer.
[5]
The appellant's practice was that Mr. Rosenberg or some
other employee discuss with a prospective worker the work to be
performed. Mr. Rosenberg declared a worker is free to work
elsewhere and may work for the appellant for as many or as few
hours as he wishes. The installers supply their own vehicule to
travel to and from an installation site. There is no Accurate
Alarm signage on the vehicule. The appellant paid an installer a
mileage allowance for work outside of Winnipeg. The worker uses
his own tools. The appellant, when required, will make available
a specialized tool used in about one per cent of the
installations and a long extension ladder.
[6]
The prospective worker negotiates the pay for his services, said
Mr. Rosenberg. Mr. Rosenberg stated that the worker is told
no statutory deductions will be withheld from his pay. The
installer is paid at an hourly rate. Mr. Rosenberg denied he
dictated the hours and rates of pay to the workers.
[7]
If an installer was inexperienced, Mr. Rosenberg explained,
the appellant would "couple" the new installer with
an employee[1] or
an experienced installer to "learn our philosophy".
The "philosophy" includes the method the appellant
uses to route wiring, to soder wire connectors and to perform
other tasks. In this case the experienced installer will be paid
an additional amount.
[8]
Installers are asked to have a "neat" appearance.
There is no uniform, Mr. Rosenberg declared.
[9]
Mr. Rosenberg stated that installers advise the appellant in
advance the days and times they wish to work. The
appellant's "client project coordinator"
matches the installer to scheduled installations; the installers
may refuse jobs, said Mr. Rosenberg.
[10] A typical
day for an installer starts when he or a helper attends at the
appellant's location to pick up from a bin material needed
for a scheduled installation. There is no "sign-in
procedure", Mr. Rosenberg emphasized. Nor is there a
procedure where the installer is to check in with the appellant
during the day. Other than a description of the work to be done,
the appellant gives no instructions to the worker. The worker has
discretion to improve the installation indicated and if there is
a cost differential, the worker is to call the appellant for its
approval and that of the customer.
[11] The
appellant does not pay an installer any extra if he hires a
helper on his own account.
[12] The
appellant does not verify the work of an installer unless a
customer reports a problem. The appellant has several warranty
arrangements available to a customer; the basic warranty is for
one year on labour and parts. If the installation is deficient,
the installer must correct the deficiency on his own time and at
his own expense. If the problem is with the equipment or parts,
the appellant reimburses the installer for his time and cost, if
any.
[13] Where a
system is installed in a home under construction, the installer
may work at the site when he wishes since no appointment has been
made. Most of the work in a new home is done before the drywall
is installed.
[14]
Installers are to keep track of their hours and invoice the
appellant every two weeks, according to Mr. Rosenberg. The
appellant supplies the installer with blank invoices to complete
and return to the appellant. The appellant decided to supply
invoices to the workers since previously its workers provided
invoices on paper napkins and other paper. A blank invoice is
placed in the installer's bin at the appellant's
office every two weeks. The appellant would have usually received
an invoice, presumably handwritten, from the installer. The new
invoice is a "replication" of the previous invoice.
The appellant retains the original.
[15] The
information on the invoice produced at trial is written in type
and describes the days, dates and hours for that day that the
installer worked, and a subtotal of hours for the two-week
period. Some installers, Mr. Rosenberg stated, submitted
computer generated invoices. The invoice produced at trial does
not state the amount owed to the installer, although it confirms
the name and address of the installer; Mr. Rosenberg could
not explain this omission.
[16]
Mr. Rosenberg declared that the appellant does have
installers who are employees; their salary is not dependent on
hours worked and is subject to statutory withholdings. Employees
also have medical benefits. Messrs. Peter Cole and
Gavin Rankin, explained Mr. Rosenberg, were
subcontractors who became employees in 1999.
[17] Employees
who work for the appellant, Mr. Rosenberg testified,
"are always working for us" and do not choose when
they want to work.
[18]
Mr. Rosenberg explained that as the appellant
"grew", it wanted employees. In 1999 the appellant
had 15 employees including a receptionist, controller,
administrator, project coordinator, installation manager (who
deals with customers and technical installation problems) and
sales representatives. He also discussed the work of several of
the workers where status is under review in these appeals. He
said he did not initially interview Mr. Marschall and spoke
to him only casually. Mr. Marschall left the appellant after
several weeks as an installer, according to Mr. Rosenberg,
because he could not live on what he was earning from the
appellant.
[19] Two-way
radios are supplied to installers at new homes in case they
require help, not to keep in touch with the appellant as to a
job's progress, said Mr. Rosenberg. Pagers are
supplied to installers who are employees and only
"sometimes" to subcontractors. Pagers were given to
Peter Cole, Gavin Rankin, Gerald Schulz and Chris
Rankin before they became employees.
[20]
Installers who were employees did the same work as before they
were employees, but were assigned more complex jobs,
Mr. Rosenberg testified. Messrs. Cole and Schulz, as
employees, also made service calls and would talk to clients by
telephone. Previously, Mr. Rosenberg and the project
coordinator would deal with clients by telephone. Mr. Schulz also
helped prepare work orders, when necessary.
[21] One of
the workers, Guy Boiteau, was once paid a "flat rate"
to install a security system. Mr. Rosenberg described
payment "by the job" an expensive way to pay a
subcontractor but is "sometimes done". On other
installations, it appears, Mr. Boiteau was paid on an hourly
basis.
[22] Finally,
Mr. Rosenberg denied under cross-examination that the
appellant had to approve the employment of a helper by an
installer or that a worker could not refuse a job. He explained
installers could trade jobs "but we try to give them a
logical order". He also denied a worker could not take time
off to do some other job. The appellant distributed a company
"T-Shirt" as a promotional item, not as a uniform,
Mr. Rosenberg insisted.
[23] Messrs.
Schulz, Marschall and Vissarra also testified, Mr. Schulz for the
appellant and the latter two gentlemen for the respondent. Mr.
Schulz, an employee of the appellant at time of trial,
corroborated much of Mr. Rosenberg's evidence.
[24] Mr.
Schulz had 20 years experience in the security system industry,
although he had no formal training in electronics. When he was
"let go" by his former employer he applied to the
appellant for work and was interviewed by Mr. Rosenberg. He
said he "negotiated" an hourly rate of pay to work as
a contract installer. Carrying on business under the name of GDS
Technical Services, Mr. Schulz also installed systems for
his own account while working for the appellant as a
subcontractor. There is no evidence that Mr. Schulz billed the
appellant in the name of GDS Technical Services; indeed, the
inference is that he did not. If he truly was an independent
contractor dealing with the appellant, one may reasonably
conclude that he would have billed through GDS Technical
Services.
[25] At their
interview, Mr. Schulz told Mr. Rosenberg what days he was
available to work and Mr. Rosenberg "gave me work [for]
those times". He could have refused work, Mr. Schulz
recalled, but never did.
[26] Although
there was no requirement to "check in" with the
appellant, Mr. Schulz picked up the material from his bin at
"about 8:30" each morning. He used his own vehicule
to travel to customers and was not reimbursed for travel
expenses. Mr. Schulz used his own tools which, he said, had a
value of between $2,000 and $3,000. If a tool broke, he absorbed
the cost of a replacement.
[27] Different
jobs took different times to complete, Mr. Schulz recalled,
and if he completed all his assigned work for the day, he
"would call in" for more work or go home. The
appellant provided Mr. Schulz with a two-way radio in case
of "emergency" or to contact the appellant if a
customer told him to do different work than that assigned by the
appellant. Both before and after he became an employee,
Mr. Schulz used a pager for the "office to get in
touch with me in case of an emergency service call". As an
employee he was required to have a pager.
[28] At his
first "one or two jobs ... somebody came by to see if
I knew what I was doing", Mr. Schulz testified. If he
thought a cable should run a route different than that agreed to
by the sales representative and the customer, and additional cost
was involved, he would telephone the appellant for approval. He
agreed that if his work was deficient, he would have to correct
the deficiency on his time and at his own cost.
[29] Mr.
Schulz invoiced the appellant every two weeks. He would obtain a
"blank sheet of paper" and enter the hours and dates
worked. He usually worked four to six hours a day, but sometimes
as many as 16 hours.
[30] Mr.
Schulz reported his income on his tax returns on the basis he was
an independent contractor. He became an employee on March 26,
1999, he said, because his wife was ill and he required a health
plan and wanted "steady work". As an employee his
work changed "somewhat"; he was put in charge of the
installers and also programmed systems.
[31] Mr.
Schulz interviewed Mr. Marschall to work for the appellant. He
said he told Mr. Marschall that he would be a contract installer
and that the appellant did not guarantee a minimum number of
hours of work. Because Mr. Marschall did not want to
describe his previous job other than it was in electronics,
Mr. Rosenberg recalled, they "discussed" pay of
$7.00 per hour for the first month "until we determined if
he was competent". During the first month
Mr. Marschall did not work "independently" and
"never completed a full installation by himself".
Mr. Schulz estimated that it takes "at least" a
month to explain to people the method of installation we use.
[32] Mr.
Marschall testified that he worked for the appellant from May 5
to July 26, 1999 after answering an advertisement in the
Winnipeg Free Press for an alarm technician. He brought his
resumé to a meeting with Mr. Rosenberg and
"discussed" his experience in cabling. Later,
Mr. Rosenberg telephoned him at home to inform him "he
was hired". He denied he was told he would be a
"contract installer".
[33] Hours of
work were not discussed with Mr. Rosenberg, according to
Mr. Marschall, and Mr. Rosenberg "told" him his
"starting rate" would be $8.00 per hour. Pay was
later increased to $9.50 per hour when Mr. Marschall
complained that after purchasing tools for $500.00, and the cost
of gas and repairs, he was "only making $3.00 an
hour" and he could not live on $3.00 per hour.
[34] According
to Mr. Marschall, he was expected to report for work at the
appellant at eight o'clock each weekday morning. At eight
o'clock he would be told who he would be assisting that
day. After he was given a radio, he would "call the
appellant to see which technician I would go with", if he
should go to the office or to an installation site. Most mornings
he would first go to the appellant's office and then to the
site where the instructing installer was to work.
[35] The
appellant's office closed at five o'clock in the
afternoon. If Mr. Marschall finished his work before then he
would telephone the appellant to advise that he was going home.
His day would end with the completion of the last installation.
Mr. Marschall took a "few days" off during the time
he worked for the appellant. During one two-week period he
only worked two days.
[36] Mr.
Marschall also testified that the "T-Shirt" given to
him by Mr. Rosenberg was the "preferred" shirt
to wear, in particular at a "high end" or business
installation "so people would know who we are". He
also explained that the appellant had two types of installation,
an Accurate Alarm installation and a Standard Alarm installation.
In the former, the wires were hidden behind the wall, in the
latter, the appellant was "not too particular where the
wiring went". The work order would indicate the type of
installation required.
[37] Mr.
Marschall was never responsible for deficient work, this was the
responsibility of the installer he helped.
[38] Mr.
Marschall left the appellant without notice, apparently informing
the technician, Chris Rankin, he was to work with on the day he
left that he "had enough" and "was going to
E.I.".
[39] Mr.
Vissarra also disputed evidence given by Messrs. Rosenberg and
Schulz. Mr. Vissarra worked as a telephone technician in the
Phillipines for 15 years before he immigrated to Canada in 1999.
He was interviewed by Mr. Rosenberg who inquired as to his
experience in the installation and maintenance of telephone
equipment. Mr. Vissarra's initial pay was $8.50 an hour,
which was increased by the appellant to $10.00 per hour after two
months. Mr. Vissarra said he did not ask for the increase,
although he expected it.
[40] The hours
of work, according to Mr. Vissarra, were from Monday to Friday,
starting at eight o'clock in the morning when he would
report to the appellant's office and end when he completed
the work orders for the day. Mr. Rosenberg, he testified,
told him to report to the appellant every morning at eight
o'clock. He was also required to telephone the appellant
every time he finished a job. In case of illness he called the
appellant's office as directed by Mr. Rosenberg.
Mr. Rosenberg also told him to advise in advance when he
wanted days off.
[41]
Mr. Vissarra had a "partner" with each
installation he was assigned since he was being trained. He
worked for ten months at the appellant, always as a trainee, he
declared, even after the training period was over. He did not
install systems by himself, except for pre-wiring of houses under
construction. Usually he would work in the basement and his
"partner" would work upstairs. The
"partner" or "lead man" was in charge,
except for several days near the end of Mr. Vissarra's work
at the appellant when he was the "lead man". As far
as Mr. Vissarra was concerned, he was trained after a month and a
half and "didn't need anyone to tell [me] what to
do".
[42] It is
quite obvious that with respect to the periods the workers were
"trainees" or "helpers" or were teamed
with another installer (as was Mr. Vissarra, for example),
they were employees of the appellant. As trainees or helpers they
did not have the skill to operate a business that would
reasonably attract any customer. The appellant was instructing
them how to install a security system in accordance with its
procedures. During this time, at least, the workers were not
carrying on their own businesses but were dependent upon, and
under the supervision of, the appellant.
[43] Except
for the witnesses who testified at trial, there is no evidence
before me of the periods when the other installers were trainees
and helpers and the time when they ceased to be trainees and
helpers and worked on their own without supervision. However,
notwithstanding that installers may have ceased to be helpers and
trainees and worked by themselves, I am not at all satisfied they
were independent contractors.
[44]
Appellant's counsel submitted that the workers did not work
in the manner normally performed by an employee. They worked
irregular hours, did not have regular "stop and start
times", including time off for lunch. Usually an employer
wants work records submitted more frequently than every two
weeks. The workers attended at the appellant's office each
day not to "sign in", she declared, but to get their
bookings for the day.
[45] In the
view of appellant's counsel, the situation of
Mr. Marschall was different from the other workers. He was
experienced in electronics and had the ability to "cost
out" the jobs he was given. He wanted more money. Indeed,
she stated, Mr. Marschall agreed when hired that he would
work as an independent contractor. He later changed his mind.
[46] The
Federal Court of Appeal has directed the approach a trial judge
must take in considering whether the worker is an employee or an
independent contractor: Wiebe Door Services Ltd. v.
M.N.R.[2]. One
must consider, among other things, in combination and not
separately, the degree of control exercised by the employee over
the way in which the work is to be done, the ownership of tools
and equipment, the chance for profit by the worker and his or her
risk of loss. The degree to which the worker is integrated into
the employer's business is important. Whether the worker
has the power to hire people to do the work or must perform the
work himself must also be considered. At the end of the day, the
trial judge weighs all factors, giving appropriate weight to each
factor, and comes to a conclusion based on the force of the
evidence.
[47] The fact
that a worker, such as Mr. Schulz, for example, may have carried
on a business similar to that of the appellant at the time he
worked for the appellant or that the tools required for most
installations were owned by the workers or, that the workers
provided their own vehicules to go to sites are not strong enough
factors to overlook the preponderent weight indicating the
workers were employees. The only chance of profit to the workers
was if they were able to increase the number of their jobs; this
is not inherent to independent contractors. Employees may
increase their wages by working long hours, if work is
available.
[48] The
workers were employees of the appellant in 1999. For the most
part they were trained by the appellant to perform their labour
according to the appellant's practice and procedures. They
did not have the discretion to perform their work in ways
different from these practices and procedures. The appellant
directly at first, when the workers were trainees or helpers, and
indirectly later exercised a substantial degree of control over
the way the work was to be done.
[49] I
conclude that the workers were required to report to the
appellant's office each morning for instructions and
supervision, not simply to see what was in their bins. My
observation of the witnesses leads me to prefer the evidence of
Messrs. Marschall and Vissarra that there was a high degree
of supervision of installers during their work by means of radio
and telephone and by reporting daily to the appellant's
office.
[50] The
installers and their work were integrated into the
appellant's business. The workers were not engaging
themselves to perform the services as persons in business on
their own accounts.[3]
[51] The
appeals are dismissed.
Signed at Ottawa, Canada, this 19th day of April
2001.
"Gerald J. Rip"
J.T.C.C.
COURT FILE
NO.:
2000-729(EI), 2000-2833(EI) and
2000-730(CPP), 2000-2834(CPP)
STYLE OF
CAUSE:
While-Away Security Services Inc.
o/a Accurate Alarm and
The Minister of National Revenue
AND
While-Away Security Services Inc.
o/a Accurate Alarm and
Her Majesty the Queen
PLACE OF
HEARING:
Winnipeg, Manitoba
DATE OF
HEARING:
January 30, 2001
REASONS FOR JUDGMENT BY: The
Honourable Judge G.J. Rip
DATE OF
JUDGMENT:
April 19, 2001
APPEARANCES:
Counsel for the Appellant: Barbara M. Shields
Counsel for the
Respondent:
Tracy Harwood-Jones
COUNSEL OF RECORD:
Counsel for the Appellant:
Name:
Aikins, MacAulay & Thorvaldson
Barristers & Solicitors
Firm:
30th Floor, 360 Main Street
Winnipeg, Manitoba R3C 4G1
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-729(EI)
2000-2833(EI)
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on common evidence with the
appeals of While Away Security Services Inc., o/a Accurate
Alarm (2000-730(CPP)) and (2000-2834(CPP)) on
January 30, 2001, at Winnipeg, Manitoba, by
the Honourable Judge Gerald J. Rip
Appearances
Counsel for the
Appellant:
Barbara Shields
Counsel for the
Respondent:
Tracy Harwood-Jones
JUDGMENT
The
appeals pursuant to subsection 103(1) of the Employment
Insurance Act for the period between January 1, 1999 and
December 31, 1999 are dismissed and the decision of the Minister
is confirmed.
Signed at Ottawa, Canada, this 19th day of April
2001.
J.T.C.C.
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