Citation: 2013 TCC 358
Date: 20131108
Dockets: 2012-2456(EI)
2012-2457(CPP)
BETWEEN:
SB TOWING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SAMUEL ZAIGH,
Intervenor.
REASONS FOR JUDGMENT
Hogan J.
I. Introduction
[1]
These are appeals from
determinations and assessments made by the Minister of National Revenue
(the “Minister”) under the Employment Insurance Act (“EIA”) and
the Canada Pension Plan (“CPP”). The Minister determined that the 39
individuals (the “Workers”) listed in Schedule A of these reasons were employed
by the Appellant, SB Towing Inc. (“SB Towing”), in insurable and pensionable
employment.
[2]
The Appellant requested
a review of the determinations, which were confirmed. The Appellant argues that
the Workers were independent contractors providing services to the Appellant in
the course of businesses carried on by them on their own account.
II. Factual Background
[3]
SB Towing is a towing
and roadside assistance company that services London, Ontario. The Appellant
hired the Workers to drive roadside assistance vehicles (“RSA Vehicles”) for
the purpose of providing general roadside assistance. The Workers performed
services such as changing tires, delivering gas and boosting batteries. SB Towing
operates 24 hours a day, seven days a week. Brenda Schrans is the president and
sole shareholder of the Appellant.
[4]
Most of the Workers
signed a written contract identified as the Independent Contractor Agreement or
the Contractor Obligations (the “Agreements”). The Agreements indicated that
the Workers were independent contractors who were responsible for paying their
own taxes. The evidence shows that the Appellant did not deduct income taxes,
EI premiums or CPP contributions from the Workers’ pay.
[5]
The Appellant owned or
leased the RSA Vehicles used by the Workers. Some Workers enjoyed exclusive use
of such a vehicle while others had to share an RSA Vehicle with a Worker from a
previous shift. The operating expenses and insurance for the RSA Vehicles were
paid by the Appellant.
[6]
At all relevant times,
the Appellant was under contract (the “CAA Contracts”) with the Canadian
Automobile Association (“CAA”) to provide roadside assistance to CAA members.
[7]
The CAA Contracts required
the Appellant to, among other things:
(a) be available to
provide services to CAA members at all times;
(b) keep a minimum number
of RSA Vehicles on the road; and
(c) maintain service
standards, the most important of which was to assure arrival on the scene within
30 minutes of being informed of the need for roadside assistance.
[8]
The Appellant’s RSA Vehicles
were equipped with an on-board CAA mobile computer system through which service
calls were transmitted and accepted. CAA calls represented approximately 90%
of all service calls made by the Workers, and substantially all (90% or more)
of the Appellant’s and Workers’ revenue was derived from these calls.
[9]
CAA calls were
dispatched directly to a truck’s CAA computer, according to a Worker’s
proximity to the location of the client. When a call came to a Worker’s
computer, the Worker generally had 10 minutes to indicate if he would accept or
reject the call. The CAA’s policy is that the RSA Vehicle must arrive at the
location of a client’s car within 30 minutes of that client calling the CAA for
service. The CAA Contracts provided that the Workers had to give priority
to CAA calls over any other calls.
[10]
If a Worker was out of his
truck when a call came in on the CAA computer, it would be forwarded to his
cell phone. If a Worker did not have a cell phone prior to his starting to work
for the company, the Appellant would provide him with one and deduct the cost
from his pay.
[11]
On average,
approximately 10% of a Worker’s service calls were a combination of non-CAA calls,
dispatched by the Appellant and requests for roadside assistance received by
the Worker himself while driving around. In a few cases, Workers received calls
on their cell phones from personal contacts, although the evidence is
incomplete on this point.
[12]
The Workers earned a 30%
commission on gross revenue on each service call they made. This included CAA
calls, for which there were pre-established rates, as well as the “cash calls”
for which the Appellant provided guideline rates. Most drivers did not earn
more than $30,000 in any of the years in the relevant period.
[13]
The Workers were paid
monthly, as decided by the Appellant. The Workers were required to sign their
pay stubs to approve their pay and deductions for the month. The Workers did
not receive any benefits or vacation time.
[14]
The Workers were
responsible for any damage caused to their RSA Vehicle or to other vehicles, up
to a maximum deductible of $2,500.
[15]
The CRA issued rulings
in 2011 which found that six Workers were employees rather than independent
contractors. Following this, the Minister assessed the Appellant for the 2008
to 2010 taxation years and found that the 39 Workers referred to
earlier were employees.
[16]
The amounts of unpaid
EI and CPP contributions are as follows:
|
Taxation Year
|
Amount Assessed
under EIA
|
Amount Assessed
under CPP
|
|
2008
|
$16,199.88
|
$29,786.00
|
|
2009
|
$16,274.11
|
$29,760.68
|
|
2010
|
$16,327.25
|
$30,887.56
|
III. Issue
[17]
The question before me
is whether or not the Workers held pensionable and insurable employment in the
relevant period. In other words, were the Workers employees of the Appellant or
were they earning business income as independent contractors?
IV. Parties’ Positions
(A) Appellant
[18]
The Appellant argues that
the Workers were not engaged in pensionable and insurable employment because they
were independent contractors.
[19]
The Appellant submits
that the signed Agreements are clear indicators that the Appellant and the
Workers intended to form an independent contractor relationship. Further, the
Workers were reminded of their status as independent contractors when they
signed their monthly pay statements, which showed that there had been no
deductions for income tax, CPP or EI. Moreover, certain Workers paid their own
EI and CPP contributions and claimed business expenses for their tools. For
these reasons, the Appellant argues that the intention of the parties was to
create a contract for services.
[20]
With regard to the
assessment of whether factual reality supports such an intention, the Appellant
argues that Ms. Schrans exercised little direction and control over how the
Workers performed their duties or over their choice to accept or reject calls. Ms.
Schrans testified that the Workers were free to fix their work schedule and determine
their work locations.
[21]
Finally, according to
the Appellant, the fact that the Workers earned 30% commission on the service
calls they made is indicative of an independent contractor relationship. Under
this compensation arrangement, the Workers had control over the profit and
income they made. If they worked harder, faster and longer, they would make
more money. Risk of loss was also present since the Workers would be charged up
to a maximum of $2,500 for any damage they caused to the Appellant’s or a client’s
vehicle.
(B) Respondent
[22]
The Respondent counters
that the evidence considered as a whole does not support the conclusion that
the Workers accepted the independent contractor status imposed upon them by the
Appellant. First, the evidence shows that some of the contracts were backdated.
The implication is that the Workers signed the Agreements out of fear of losing their employment. The
evidence also shows that the Agreements, whether signed initially or after
employment began, were prepared by the Appellant and presented as a non-negotiable
offer.
[23]
In the event that I were
to arrive at a contrary conclusion with respect to all or some of the Workers,
the Respondent submits that the intent to create an independent contractor
relationship is not supported by the underlying factual circumstances of the
Appellant’s relationship with its Workers. In this regard, the Respondent notes
that the Appellant exercised control over the Workers in the form of
disciplinary action. The Appellant established a schedule which determined
who was working and when. Ms. Schrans determined the amount and form of payment
by customers. The Appellant supplied the RSA Vehicles to the Workers without charging
them any fee. Fuel, insurance and repairs to the RSA Vehicles were also paid for
by the Appellant. Finally, the Workers did not have an opportunity to make a profit
or incur the risk of losing money from their work since the large majority of
that work came from the CAA, which had an established price and commission rate
worked out with the Appellant.
V. Analysis
[24]
Distinguishing
employment from an independent contractor arrangement can be challenging
because working conditions and relationships are unique to every workplace and
are constantly evolving.
[25]
The distinction turns
on the following definitions of “employment”:
(a) Paragraph 5(1)(a)
of the EIA defines it as:
employment in Canada by one or more employers, under
any express or implied contract of service or apprenticeship, written or oral,
whether the earnings of the employed person are received from the employer or
some other person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or otherwise.
(b) Subsection 2(1) of the CPP provides:
“employment”
means the state of being employed under an express or implied contract of
service or apprenticeship, and includes the tenure of an office.
[26]
The leading case on
this issue is Wiebe Door Services Ltd. v. Minister of National Revenue, which
was confirmed by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz
Industries Canada Inc.
The question is always whether or not the taxpayer “is performing [the
services] as a person in business on his own account”. Sagaz
summarizes as follows the test enunciated in Wiebe Door and the
factors that need to be weighed when determining the nature of a work
relationship:
47 .
. . 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 own 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.
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.
[Emphasis added.]
[27]
In addition to these
factors, the subjective intention of the parties also needs to be considered.
Where one can establish a common intent of the parties with regard to the type
of working relationship they wished to establish, this intent must be
considered in the Court’s analysis of the foregoing factors.
[28]
It is important to bear
in mind, however, that the intention of the parties is only relevant to the
extent that it is reflected in the facts of the case. The subjective intention
of the parties is not determinative on its own. Justice Mainville of the
Federal Court of Appeal made the following clarification in 1392644 Ontario
Inc. o/a Connor Homes v. Minister of National Revenue:
37 .
. . the legal status of independent contractor or of employee is not determined
solely on the basis of the parties’ declaration as to their intent. That
determination must also be grounded in a verifiable objective reality.
[29]
Connor Homes further confirms that the analysis
involves a two-step process. First, the intention of the parties must be
ascertained in order to determine what kind of relationship they wished to
create. In the light of that intent, the second step is to analyze the facts of
the case to determine whether the objective reality of the situation is
reflective of the intent. In this second step, the Court must apply the four Wiebe
Door factors, namely: (i) control, (ii) ownership of tools, (iii) chance of
profit and (iv) risk of loss, to determine whether the factual
reality reflects the subjective intention of the parties.
(A) Intention of the Parties
[30]
In light of the Connor
Homes case, I must first determine whether the parties intended to enter
into a contract of service, indicating an employee-employer
relationship, or a contract for services, which indicates an independent
contractor relationship. This may be determined by considering any legal
agreements that exist, or the behaviour of the parties, such as their income
tax filings, GST registrations, or invoices for services rendered.
[31]
From the evidence, it
is clear that the Appellant desired to employ the Workers under an independent
contractor arrangement. The question is whether the Workers agreed with this
characterization of the relationship.
[32]
For the purpose of
ascertaining whether there was a common intent between the Appellant and the
Workers, the Workers are divided into five groups.
(a) Group of Workers No.
1: Dave Green, Gary Penny, Nathan Vessie. These Workers signed Independent
Contractor Agreements and also testified that it was their intention to work
for the Appellant as independent contractors. Mr. Green and Mr. Penny
filed their own tax returns for the period in question and also paid their EI
premiums and CPP contributions. Mr. Penny deducted the expenses for his tools
as business expenses. Their evidence suggests that they have a working
knowledge of the difference between an employee and an independent contractor.
For these reasons, I find that the Appellant and these Workers had a common
intention to establish an independent contractor relationship.
(b) Group of Workers No. 2:
James R. Sheridan, Samuel Zaigh, Christopher Book. These Workers signed
the Contractor Obligations or Independent Contractor Agreements. However,
they all testified that they saw themselves as employees of SB Towing. Mr. Sheridan
and Mr. Zaigh testified that they did not pay the required EI and CPP contributions
for the relevant period. These Workers appear to have a basic knowledge of
the difference between employees and independent contractors. I accept
their testimony with regard to their subjective intent and, accordingly, I find
that these Workers did not accept the Appellant’s characterization of
their relationship.
(c) Group of Workers No.
3:
These Workers signed at least one version of the Contractor Obligations or the
Independent Contractor Agreements; however, they did not testify. The only
evidence before the Court as to their intentions are the Agreements, signed
consent forms with regard to deductions from pay and the Respondent’s
assumption that seven of these Workers reported business income and business
expenses during the period in question. I accept the intention stated in the Agreements
because there is no conflicting evidence to suggest any other intention. While
I acknowledge that pressure to secure work could have led the Workers to
accept the Appellant’s characterization of their relationship, in the absence
of direct evidence refuting the stated intent, I must find that there was a
common intent to establish an independent contractor relationship.
(d) Group of Workers No.
4:
These Workers did not testify in this case and there is no evidence that any of
them signed Contractor Obligations or Independent Contractor Agreements. It is
unknown if this was intentional or an oversight. The only documents presented
in court were monthly consent forms with regard to the deduction of certain
amounts from pay, which the Workers were obliged to sign in order to receive
their paycheques. These documents refer to the Workers as independent
contractors in several places. Despite this, I do not find that these documents
are indicative of a particular intention of the Workers. In my view, the Workers
would have signed the documents no matter what their intentions may have been in
order to receive their pay. I thus do not attribute to these Workers any
specific intentions.
(e) Donald Zerdzicki:
This Worker had a purely verbal contract with the Appellant and there is no
evidence of signed consent forms regarding the deduction of certain amounts
from pay. This Worker did not testify in this appeal. Without further evidence,
it is impossible to ascertain his true intentions, and accordingly, I do not
attribute to this Worker any specific intention.
[33]
Most of the Workers did
not become GST registrants during the relevant period. This is of little
relevance to the intent analysis because a large majority of the Workers earned
less than $30,000 annually and were exempt from the registration requirement.
Only a small number of Workers—four in 2008, one in 2009 and six in 2010—improperly
failed to become GST registrants. In those cases, the Worker’s income was only
marginally above $30,000. The failure to register for GST purposes is a minor
consideration in the overall analysis of intent. Not registering could speak as
much to the inattention or negligence of Workers as it could to their subjective
intent. I thus find it to be a neutral consideration that has no impact on the
analysis.
[34]
A “worker” as defined for
the purposes of the Ontario Workplace Safety and Insurance Act, 1997
(“WSIA”) is a person who has entered into or is employed under a contract of
service.
An “independent operator”, on the other hand, is not hired under a contract of
service.
[35]
The Workplace Safety
and Insurance Board (“WSIB”) applies an “organizational test” to distinguish
employees from independent operators. The relevant factors are similar to the
factors that are required to be weighed in the instant case, namely: control,
ownership of tools, chance of profit/risk of loss, and involvement in the employer
business’s organization.
[36]
When an
employer-employee relationship exists, the employer is required by law to pay
the WSIB premiums to cover its employees. With the exception of those operating
in the construction industry, independent operators are not automatically
entitled to benefits under the WSIA. Thus, a principal who hires such
contractors is not required to pay WSIB premiums on their behalf.
[37]
In order to be covered
under the WSIA, independent operators/contractors must apply for optional
insurance. If an independent contractor’s work falls within the industries
listed in Schedule I or Schedule II of the general regulations under the WSIA,
the WSIB can choose to deem that contractor to be a “worker” within the meaning
of the WSIA and grant the contractor coverage.
[38]
Although this is not
explicitly stated in the WSIA, I understand that independent operators can
personally apply for optional insurance and pay the premiums themselves, or
their principal apply and pay on their behalf.
[39]
In the case at bar, Ms.
Schrans testified that she paid WSIB premiums for the Workers as independent
contractors. I presume that her testimony means that she applied on behalf of
her independent contractors to have them deemed to be “workers” within the
meaning of the WSIA and that she paid the amount of their premiums.
[40]
Several unanswered
questions arise from knowing that the Appellant paid the premiums for the
contractors: What was Ms. Schrans’ understanding of her rights and obligations
under the WSIA? Is this indicative of an intention on her part to create an
employer-employee relationship? Is it common practice for principals in
industries involving physically strenuous work to provide this type of
insurance coverage for their independent contractors? Was Ms. Schrans driven by
the fact that, when workers are insured through the WSIB, they relinquish their
right of action against other workers or against employers for injuries
sustained while at work?
[41]
Unfortunately, Ms.
Schrans’ intention in paying the WSIB premiums was not fully explored in court.
Therefore, I find the WSIB issue to be a neutral one that does not change the
foregoing conclusions as to the intent of the parties.
(B) Wiebe Door/Sagaz
Factors
(i) Control
[42]
Control, in the context
of distinguishing employees from independent contractors, has been defined as
the “ability, authority, or right of a payer to exercise control over a worker
concerning the manner in which the work is done and what work will be done”.
The more control the payer has over the Workers, the more the relationship will
resemble that of employer‑employee. Similarly, the more independence the
Workers enjoy in determining how they will execute their tasks, the more they
will appear to be in business for themselves.
[43]
Ms. Schrans testified
that the Appellant had practically no control over the Workers’ schedules and
performance. She suggested that the Workers could organize their work as they pleased.
Her testimony, however, is contradicted by the terms and conditions of the CAA Contracts.
In light of the fact that these contracts made up approximately 90% of the
Appellant’s revenue, I do not believe that the Appellant would have relinquished
control over the Workers and thereby risked breaching the CAA Contracts, which
imposed strict performance standards.
[44]
Ms. Schrans’ testimony
is also inconsistent with the testimony of Mr. Book, Mr. Zaigh and Mr.
Sheridan, whom I found to be credible witnesses notwithstanding the minor
inconsistencies noted by the Appellant’s counsel in her written arguments submitted
after trial. Ms. Schrans’ testimony is contradicted as well by the
testimony of Mr. Vessie, a witness for the Appellant and a current Worker,
who admitted in cross-examination that he was reprimanded by Ms. Schrans
for poor performance.
In light of these contradictions, I believe that Ms. Schrans has overstated her
claim that the Workers enjoy considerable freedom with regard to how and when
they perform services for the Appellant.
[45]
The evidence shows that
the Appellant had the ability to discipline and reprimand the Workers. Ms.
Schrans could give verbal or written warnings, cancel shifts, terminate drivers,
etc. The Appellant submits that “the practical reality of the situation was
that drivers were not disciplined in a meaningful sense.”
However, several witnesses testified that the Appellant could and did take RSA Vehicles
away from Workers as a method of discipline. Ms. Schrans herself testified that
she had once taken a truck away from a Worker for misconduct. In my opinion, taking
an RSA Vehicle away from a driver is the ultimate example of control since the RSA
Vehicle is an absolutely essential tool in the roadside assistance industry.
Furthermore, having the ability to take a truck away from a Worker, thereby
eliminating that Worker’s ability to earn income, puts the Worker in a position
of subordination vis-à-vis the Appellant.
[46]
Certain versions of the
Agreements had checklists of the equipment on the trucks and set out rules
established by the Appellant for the Workers to follow. The Appellant submits
that “such rules were not strictly enforced or enforced at all” and that
“the evidence as a whole, suggests a laissez-faire approach rather than strict
enforcement of rules”.
However, the law is clear in establishing that the analysis of the control
factor must involve an assessment of the right and the power to exercise
control, not of whether or not control is actually exercised over workers. On this
issue, I find that the Appellant could have exerted its control by enforcing
the rules if it had so wished.
[47]
Complaints from clients
about Workers would first go through the CAA and then through Ms. Schrans so
that she could address the issues with the Workers. This is a further
indication that the Appellant assumed a supervisory and disciplinary role with
regard to the Workers, and it supports the testimony of several witnesses, who
called Ms. Schrans the “boss”.
[48]
Some of the evidence
suggests that the Workers could reject calls in certain circumstances. For
example, Mr. Vessie would not provide service for motorcycles and Mr. Penny
would reject calls for low-slung and oversized vehicles due to previous liability
issues these Workers had had with these types of vehicles.
[49]
The witnesses for the Respondent
testified that Workers could not reject calls without a valid reason and that
to reject a call without a reason could result in disciplinary action by the Appellant.
[50]
Mr. Green and Mr. Penny
testified that they could reject calls for any reason whatsoever. It is
notable, however, that they also testified that they very rarely, if ever, rejected
calls, because they were eager to make money from each call.
[51]
Ms. Schrans testified
that the Workers were not obliged to take the calls that came through the CAA
computer, and that she had no control over whether they accepted or rejected calls.
She stated “of course I don’t want them to reject a call, but I have no control
over that.”
Ms. Schrans further testified that the CAA’s policy was that the Workers had to
respond to calls unless they were unable to do the call properly. In
cross-examination, Ms. Schrans acknowledged that the Workers were not supposed
to reject calls without a good reason.
[52]
The contract between SB
Towing and the CAA provides that CAA calls must be given priority over all
other calls to the company, and the Workers must respond promptly to every call. The
Workers had to accept or reject a call within 10 minutes of receiving
it in their RSA Vehicle, and the CAA’s policy required Workers to be at the
scene of the client’s breakdown within 30 minutes following the call. Service
must always be provided, 24 hours a day, seven days a week.
[53]
On the basis of the
evidence, I find that the Workers were not at liberty to simply reject calls
without a reason. As Ms. Schrans indicated, the Workers needed to have a good
reason to reject a call. To allow the Workers to reject calls from the CAA
without any reason would have put the Appellant at risk of breaching its
contract with the CAA by not giving priority and not quickly responding to each
CAA call. It would also have made for a highly inefficient use of company
vehicles if the closest Worker to a given client could choose to reject the
client’s call for no reason, thus forcing another Worker to come to the assistance
of that client.
[54]
For these reasons, I do
not accept Mr. Green’s testimony that there were no company rules on rejecting
calls. I prefer the testimony of Mr. Penny, Mr. Sheridan, Mr. Book
and Mr. Zaigh. They testified that, if a Worker rejected a call, Ms. Schrans
would inquire as to why they had rejected it. If she found the reason to be
unsatisfactory, the Worker could be subject to reprimand.
[55]
For the foregoing
reasons, I cannot accept the Appellant’s submission that the drivers were free
to reject calls. The contractual obligations the Appellant had towards the CAA
created a situation in which the Appellant had no choice but to control the priorities
of the Workers and to require them to accept all of the CAA calls assigned to
them.
[56]
Conflicting testimonial
evidence was given regarding whether the Workers were obliged to work the
shifts that they had been scheduled to work, whether their start time was firm
or flexible, and what, if any, notice had to be given if the Workers wanted a
day off. It is, however, clear that the CAA required a certain number of the
Appellant’s RSA Vehicles to be on the road 24 hours a day, seven days a week.
Ms. Schrans testified that, if a Worker was not coming in for a shift, she
would try to put another driver in that truck. She also admitted that she
preferred that a Worker provide her with advance notice if he was going to miss
a day.
[57]
Hence, Mr. Green’s testimony
that a Worker could decide unilaterally to skip shifts without notice does not
appear credible to me. On this issue, I prefer the testimony of Mr. Book, Mr.
Sheridan, Mr. Vessie and Mr. Zaigh, who testified that, if Workers wanted
to switch hours, miss a shift, or take vacation time, they needed to obtain
approval from the Appellant. This is consistent with Ms. Schrans’ testimony
that she tried to put other Workers in unused RSA Vehicles. It is also
consistent with the fact that SB Towing could not fulfil its contractual
obligations towards the CAA if Workers could miss shifts at their own discretion.
[58]
Mr. Sheridan testified
that failure by a Worker to start a shift on time would result in a call from
Ms. Schrans inquiring as to why the Worker had not yet signed onto the system.
Again, this is consistent with the practice of putting other drivers in trucks.
If Workers were allowed to start their shift whenever they wished,
Ms. Schrans would be unable to know which RSA Vehicles needed drivers for
a shift.
[59]
The Workers were not required
to physically wait for calls in their truck because CAA calls would be
forwarded from their computer to their cell phone. This allowed the Workers a
certain amount of flexibility and autonomy with regard to where they started
their shift. For example, they could wait for the first call of their shift in
their living room. In addition, they could take breaks and run personal errands
during the shift. The Workers were allowed to perform small personal tasks
while on their shift, and could use the company vehicles for small errands when
they were not busy. That being said, the Workers were expected to respond to
CAA calls within 10 minutes of them being sent to their computer or phone,
and they had to be on the scene within 30 minutes. The Workers therefore always
had to be at the disposal of the CAA throughout their shift.
[60]
The Workers were paid
by commission. It was the Appellant that established the 30% commission rate
applicable for all of the Workers’ completed service calls. The Workers were
paid monthly, as decided by the Appellant since SB Towing was also paid monthly
by the CAA. The Appellant kept track of the deductions to be made from the
Workers’ pay for such things as advances on pay, cell phone bills, or damage
caused by the Workers. The Workers had to sign to indicate approval of the
deductions in order to receive their pay.
[61]
Overall, the evidence
suggests that the Appellant could and did exert significant control over the
Workers. I find that the control exerted surpassed the level of control that
would be necessary to facilitate the running of their own businesses by the
Workers from their RSA Vehicles. The control factor favours the conclusion that
there was an employer-employee relationship.
(ii) Ownership of Tools
[62]
It is undisputed that
the Appellant provided the RSA Vehicles to the Workers free of charge. The
trucks came equipped with radios, certain safety equipment and CAA computers.
Some versions of the Contractor Obligations or the signed Independent Contractor
Agreements included a checklist of items that had to be in the trucks at all
times. Some of these items were provided by the Appellant (reflective
triangles, flares, fire extinguisher, first aid kit, wheel chocks, no smoking
sign, etc.). The Workers were responsible for providing their own unlock kits.
The Workers also bought some of their own safety equipment. Some Workers bought
additional tools that made their work easier: wrenches and screwdrivers, for
example. If Workers did not have their own cell phone, they could use one of
the Appellant’s cell phones, the cost of which would be deducted from their
pay.
[63]
The Appellant paid for
the insurance on the vehicles and for the fuel. The Appellant was also
responsible for all maintenance and repair costs for the trucks. As previously
stated, I find that the Appellant had a significant level of control over the
use of its vehicles. Ms. Schrans could dictate who would be in the Appellant’s
RSA Vehicles at all times and she could take a vehicle away from a Worker as a disciplinary
measure.
[64]
The Appellant gave the
Workers business cards so that they could write their names on the back and
give them to customers or other businesses. Schedule C of the Independent
Contractor Agreements provides that uniforms must be worn by the Workers at all
times. Uniforms with CAA and SB Towing logos were provided to the Workers. The
evidence suggests that some of the Workers did not comply with the uniform requirement
and that the Appellant did not always enforce this provision of the Independent
Contractor Agreements.
[65]
While the Workers had
to provide some of their own tools, by far the most important and
expensive equipment—the RSA Vehicles—was provided by the Appellant. The
Appellant further assumed all operating and maintenance costs relating to these
trucks and maintained control over them. This factor points to an employer‑employee
relationship.
(iii) Chance of Profit
[66]
The Workers earned 30% commission
on gross revenue from the service calls they made, and did not receive
benefits, vacation pay, or paid leave. The commission rate was dictated by the
Appellant. There is no evidence to suggest that the Workers could negotiate
this rate.
[67]
The Appellant argues
that the Workers could increase their profit by starting work early, finishing
late, accepting more calls and working faster and more efficiently. I disagree
with this submission. First, the CAA calls were assigned to the drivers according
to their geographical proximity to the client. In this regard, my previous observation
stands, namely, that once a CAA call was assigned to a Worker, the Worker could
not reject that call without good reason. Second, the Workers’ commission rate
was predetermined by their contract with the Appellant, and the rate for CAA
calls was predetermined by the CAA-SB Towing contract. Therefore, the Workers
earned a set amount for every CAA service call they made. In short, the Workers
had no control over which calls were assigned to them (or which ones they accepted),
and they had no control whatsoever over the amount of income they earned from
each CAA call.
[68]
The Workers already had
to work efficiently since the CAA Contracts required the Workers to respond to
calls within 10 minutes and to be on the scene in less than 30 minutes. Working
slower or accepting fewer calls was simply not an option for these Workers.
[69]
The evidence does
suggest that the Workers could seek service calls from personal contacts. For
example, Mr. Penny established a relationship with the Ontario Provincial Police
(“OPP”). He would receive calls from the OPP for accidents and cases of
impaired driving.
[70]
It is noteworthy, however,
that the Workers received the same 30% commission for cash calls and for the
clients they obtained themselves. So the profitability of finding their own work
was limited by the unchanged commission rate and was further limited by the
fact that the Workers were contractually obliged to always give priority to CAA
calls. A commissioned salesperson in a men’s wear store is expected to develop his
or her own client base in order to be successful. He or she does so to a much
larger extent than the Workers in the case at bar, but remains nevertheless, in
most cases, an employee of the store owner.
[71]
The control exerted
over the Workers’ priorities effectively curtailed the Workers’ ability to
increase their profit. This factor also points towards an employer-employee
relationship.
[72]
The Agreements are
silent as to whether or not the Workers could hire help. There is no evidence
to suggest that Workers actually hired help during the relevant period. The
reality is that, even if they could have hired helpers, the Workers did not
earn enough income to make this practical. This factor is neutral.
(iv) Risk of Loss
[73]
In the instant case,
the CAA Contracts reduced the risk of the Workers not making any money on a
particular shift due to a lack of calls. Further, the Workers did not have any
overhead or ongoing fees associated with performing their work. The Workers did
not pay for fuel, maintenance or repairs for their trucks. All of the operating
costs were paid by the Appellant.
[74]
The Workers did, however,
incur the risk of losing money for damage they caused while on a service call.
The Workers were liable up to the amount of the $2,500 insurance deductible
for any damage they caused to their own vehicle or to another vehicle by their
own negligence. I accordingly find that both parties assumed financial risk.
Because the risk of loss was limited in the case of the Workers, I find that
this factor is neutral.
VI. Conclusion
[75]
Each of the parties
marshalled a long list of cases, as is typical for these types of appeals. They
submit that these cases involve appeals raising common employee versus
independent contractor status issues and have facts similar to those in this
appeal. Suffice it to say that the application of the Wiebe Door factors
requires a determination of what the objective reality of the parties’
relationship is, which is largely a fact-finding exercise. None of the cited
cases are determinative of this question.
[76]
On balance, the Wiebe
Door factors favour a finding that all 39 of the Workers were employees of
the Appellant. The objective reality of the situation is that the Appellant had
significant control over the Workers. The Appellant provided the vehicles and
maintained control over them, and effectively eliminated the Workers’ chance to
affect their profit by controlling their work duties and priorities. When
considered as a whole, the facts and evidence before the Court suggest that the
Workers were not in business on their own account.
[77]
Accordingly, the
Workers whom I found to have a common intent with the Appellant to enter into a
contract for services were not performing their services as independent
contractors. Their intention was not reflected in the objective reality of
their working relationship with the Appellant and therefore cannot prevail. For
these reasons, I would dismiss the appeals.
Signed at Toronto, Ontario, this 8th day of
November 2013.
“Robert J. Hogan”
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