Citation: 2013 TCC 163
Docket: 2011-1064(EI),
2011-1066(CPP),
2011-1210(EI)
BETWEEN:
ACANAC INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
Docket: 2012-580(EI),
2012-579(CPP)
BETWEEN:
ACANAC INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
AARON C. MOULAND,
Intervenor.
REASONS FOR JUDGMENT
C. Miller J.
[1]
This is a case like so
many others the Court hears dealing with the question of whether workers are
employees or independent contractors, except, according to counsel for the
Appellant, with a slight twist, being this is in the high-tech industry, a fact
Acanac Inc. ("Acanac") argues requires an innovative approach to the
usual Wiebe Door/Sagaz based test the courts have developed. The
Respondent’s position is that the two workers involved, Mr. Mouland and
Mr. Westcott, were insurable employees of Acanac pursuant to the Employment
Insurance Act ("EIA") and in pensionable employment as
employees pursuant to the Canada Pension Plan ("CPP") in 2009 and
2010. Acanac has objected to these findings on the basis that Mr. Mouland and
Mr. Westcott were independent contractors. Mr. Mouland filed a
Notice of Intervention.
Facts
[2]
Acanac is an internet
service provider, providing such services primarily in major cities in Ontario and Québec. According to Mr. Louro, the President of Acanac, Acanac competes with
the likes of Bell, Rogers and Vidéotron by offering a lower cost and more
reliable service. Key to that service is the ability for Acanac to deal with
customers’ inquiries, which they do either by phone or via the internet through
Technical Support Agents (“TSA’s”). Mr. Mouland and Mr. Westcott served as
TSA’s in 2009 and 2010.
[3]
Acanac finds their
TSA’s primarily through internet sites. According to Mr. Louro, Acanac is looking
for individuals with strong technical computer expertise, though on Acanac’s
website it indicates a requirement simply of general computer knowledge. Mr.
Louro stated this is readily determined by conducting the appropriate internet
searches. Acanac will put out notices on its website or other internet sites
seeking TSA’s, and individuals with appropriate expertise respond. Mr. Westcott
was clear, however, he had no previous experience and simply heard about the
possibility of work with Acanac through a friend. This is not the only example
of Acanac’s view and the TSA’s view being somewhat different. Though there may
well be a considerable amount of information about potential candidates for a
TSA position on the internet, this is not always how the potential TSA’s were
found and hired. Mr. Louro testified that Acanac does not feel it necessary to
conduct interviews, instead relying mainly on the individual’s record as
determined from the internet. Again, this does not seem to be as evident from
the testimony of Mr. Mouland and Mr. Westcott whose specific hiring does not
exactly follow Mr. Louro’s description of Acanac’s hiring practices. Mr.
Louro did acknowledge that Acanac also hires based on references from existing
Acanac TSA’s. Acanac hires TSA’s both nationally and internationally.
[4]
Acanac has the TSA sign
an Independent Contractor Agreement, excerpts of which I have attached as
Appendix A. I note that while Mr. Mouland signed such an agreement, Mr.
Westcott did not.
[5]
Once hired, the TSA
undergoes a brief, less than a day, training session which familiarizes the TSA
with how the billing system works, how to log on with the appropriate
passwords, and also introduces the troubleshooting sites. According to Mr.
Mouland, Acanac provided the necessary troubleshooting tools to resolve most of
the problems a TSA would encounter. There was also a Word document describing
common problems. The TSA’s would be given some general steps on how to read Bell
portal diagnostic tools, so they could determine whether or not to issue a Bell
ticket; in other words, bump the problem from Acanac up to Bell.
[6]
The TSA could handle
phone calls or internet inquiries (referred to as tickets) from Acanac
customers. The phone inquiries are handled through a system at Acanac referred
to as QueueMetrics, a phone routing system owned by Acanac. So, a call comes
into Acanac and automatically will be routed to the next available TSA: if more
than one is available then whoever picks up first gets the call. Acanac has no
ability to listen in on the calls in real time, though QueueMetrics does record
the calls so that Acanac can listen to the recording after the fact.
[7]
The QueueMetrics system
tracks the length of time each call takes. This serves as a check for Acanac
upon receipt of invoices from TSA’s claiming the number of hours worked. The
hours invoiced can be checked against the hours recorded by QueueMetrics.
According to Mr. Louro cheating on time is a perennial problem.
[8]
Mr. Louro testified
that Acanac never developed a template for invoices, though it was clear the
invoices from the TSA’s were identical. If not produced by Acanac, they were
certainly a similar form that TSA’s had available to them.
[9]
While the TSA’s agreed
to an approximate 40 hour work week, either through a 9 to 5 day shift or a 4
to 12 evening shift, they were free to work more or less than that. During the
period in issue, Mr. Mouland and Mr. Westcott worked at Acanac (2009 to 2010),
Acanac was extremely busy, and the TSA’s were encouraged to work longer hours.
They only got paid for time spent on calls or dealing with the internet
inquiries. Acanac introduced the concept of a bonus hour to get more hours from
its TSA’s, while the TSA’s simply saw this as a paid lunch break.
[10]
The TSA’s worked from
home, or wherever: it made no difference to Acanac. As indicated, many such TSA’s
were from other countries.
[11]
So just what did these
TSA’s do for Acanac? They would decide which shift they wanted to work and they
would log in with their various passwords at the start of each shift. Mr.
Louro, Mr. Mouland and Mr. Westcott testified that the 40 hours set out in the
Independent Contractor Agreement were certainly not set in stone. As copies of
the invoices indicated, the TSA’s could work more or less than the 40 hours.
[12]
The signing in process
was a matter of getting into the QueueMetrics system (the Acanac system which
would automatically allocate calls), NX (to securely access Acanac’s billing
systems, the Bell portal and e-support) and Spark (an open‑source instant
messaging form of chat line for communicating amongst TSA’s and with Acanac).
Once logged in, the phone would start ringing, usually at home where the TSA’s
would be set up with their own computer, headphones and microphone. The TSA’s
could tell what other agents were online, as could Acanac.
[13]
The calls could be
simple or complicated, could be resolved internally or could be referred to Bell, if it was deemed to be a Bell problem: this could normally be determined through
access to NX. If a TSA was having a problem resolving a call, the TSA could
seek help through Spark. Mr. Kay, a supervisor, testified that if he was asked
for advice, he would lend a hand.
[14]
If the TSA required a
break, according to Mr. Mouland and Mr. Westcott, he would have to request it
from a supervisor. According to Mr. Louro, if a TSA wanted a break, it was
simply a courtesy for the TSA to advise the supervisor.
[15]
With respect to
internet inquiries, which Mr. Mouland handled in the latter part of his time
with Acanac, the practice would be similar. He testified that Acanac would
monitor how quickly he would deal with what they called tickets, and whether
any were improperly handled. He would get inquiries from supervisors as to why
there would still be open tickets.
[16]
My impression from Mr.
Mouland, Mr. Westcott and Mr. Kay was that with the limited troubleshooting
training a lot of problem-solving expertise was learned on the job.
[17]
At the end of the shift
the TSA would sign out of the various programs. The TSA would record his hours.
There was some testimony of a type of clock-in system, though Mr. Louro
testified it was nothing created or required by Acanac, but likely the TSA
themselves instituted to keep better track of their time.
[18]
Every two weeks the TSA
would submit invoices and Acanac would check the hours in the invoices against
what QueueMetrics would have recorded as hours. The form of invoices submitted
by Mr. Mouland and Mr. Westcott were identical. As indicated earlier, while Mr.
Louro suggested Acanac did not provide a template for the invoice, it is clear
Mr. Mouland and Mr. Westcott did not come up with identical invoices independently.
[19]
There were no formal
performance reviews, but Acanac would act in the event of customer complaints.
All calls were recorded so Acanac could go back and listen to a call to
determine if a complaint was justified. It was Mr. Louro’s view that
performance was controlled by the internet itself. Complainants would report
their concerns on websites for all to see. I was referred to some such
postings. Complaints were not just levelled against individuals however, often
simply by first name, but also against Acanac, the company itself.
[20]
The TSA’s did not file
for Goods and Services Tax ("GST") purposes. Both Mr. Mouland and Mr.
Westcott filed returns as having earned self-employed income, though Mr.
Westcott did not file for 2010.
[21]
There was testimony
from Mr. Louro, Mr. Mouland and Mr. Westcott about possible dissatisfaction
amongst the TSA’s leading to what Mr. Louro called a revolt, this proceeding
being part of that. I am not going to go into any detail on the evidence in
this regard, as I find it is irrelevant to what I have to decide. I would
only comment that I have not been convinced that any vendetta has motivated
this action by Mr. Mouland and Mr. Westcott. I believe there is legitimate
concern by them to have their legal status determined.
Analysis
[22]
As this Court has seen
on many other occasions, this is a type of work that could equally be performed
by an employee or independent contractor: there is nothing in the nature of the
work itself that suggests it is better performed pursuant to a contract of
service rather than a contract for services. The analysis to peg this work into
a specific slot becomes even more difficult where TSA’s want to be considered
employees and the payer wants the TSA’s to be consider independent contractors:
each takes whatever steps necessary and paints whatever picture best supports
their respective positions. Acanac clearly went so far as to have an
Independent Contractor Agreement drawn up with independent contractor-like
terms. Some might say this illustrates an intention to enter an independent
contractor relationship: the more cynical may suggest the true intention does
not necessarily go to the legal relationship, but to the result flowing from
that: that is, no requirement to make source deductions. Frankly, this has
always troubled me about putting any emphasis on the role of intention.
Reliance on intention presumes those concerned have some intimate legal
knowledge of the distinction between employment and independent contractor.
With respect, in many cases, this is an unrealistic presumption. As one of the
TSA’s put it, "it was just a job". In saying that did he mean an
employment or an independent contractor?
Clearly there was no meeting of the minds, no common
intention notwithstanding the written contract, which is a factor but simply
not determinative. So, I turn to the traditional tests enunciated in Wiebe Door Services Ltd. v. M.N.R.
and by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc. As
Justice Mainville put it recently in 1392644 Ontario Inc. (cob Connor Homes)
v Canada (Minister of National Revenue – M.N.R.):
Because the employee-employer relationship has
important and far reaching legal and practical ramifications extending to tort
law (vicarious liability), to social programs (eligibility and financial
contributions thereto), to labour relations (union status) and to taxation (GST
registration and status under the Income Tax Act), etc.,
the determination of whether a particular relationship is one of employee or of
independent contractor cannot simply be left to be decided at the sole
subjective discretion of the parties. Consequently, 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.
…
[41] The central question at issue remains
whether the person who has been engaged to perform the services is, in actual
fact, performing them as a person in business on his own account. …
Control
[23]
As the Supreme Court of
Canada has indicated, control will always be a factor, and it is clear from
Québec jurisprudence that it can be the sole determinative factor. Control over
"what", that is the question. The Appellant argues, correctly I
believe, that there will always be elements of control by a payer regardless of
whether the TSA is an employee or independent contractor. A classic example of
course is in the performing arts, where the payer controls when and where a
performer must show up for rehearsals and performances. This obviously cannot
be a type of distinguishing control.
[24]
With respect to TSA’s,
whether employees or independent contractors, Acanac must have some control
over how many workers are signed on at any given time to ensure appropriate
control of work flow. It would obviously be inefficient to have all TSA’s take
the same hour off for a break for example, leaving nobody to man the phones.
Similarly, the fact the TSA could work from home is not a controlling factor
(or lack of control factor) that really points out a difference between the
legal relationship of employee versus independent contractor. In this computer
age, in this type of computer related business, it is the reality that work can
be done in your pyjamas in the privacy of your own home – this does not suggest
any particular working relationship. The work is such that by its nature it can
be conducted informally.
[25]
The following then are
factors which, at first blush, might appear to be control issues, but which I
have concluded are neutral as not pointing to any particular legal
relationship:
- TSA’s could work from home;
- Acanac would verify
hours against invoices recorded in its own QueueMetrics system;
- TSA’s should advise
when taking a break;
- no dress code;
- training on how to
log in;
[26]
What then are the
controlling factors that might assist in making the distinction, and how should
they be weighted?
a) those factors that
suggest lack of control and therefore independent contractor relationship:
-
No performance review.
The Appellant made much of the notion that it was not
Acanac, but the worldwide web that controlled performance. Complaints would be
posted for the world to see, thus damaging the TSA’s reputation. This was the
extent of any control and it was external. A review of such postings left me
with the impression that Acanac was as much, if not more, criticized than the
TSA himself. Further, identification of the particular TSA was not always
evident. Even if I accept that this is a significant factor impacting on a
TSA’s reputation and therefore on future ability to obtain work, it is, as the
Appellant has acknowledged, an external factor. Yes, in the computer industry
there may be greater scrutiny of websites for information, but in any industry
the internet can be used as a tool to research an individual’s ability and
reputation. I do not consider that external factor, however, as bearing in any
way on the assessment of the element of control Acanac did or did not have over
the TSA.
-
Acanac did not control
how the TSA handled the calls; it could not listen in to calls at the real
time, only after the fact.
-
The TSA could choose
whichever shift he wanted and was not limited to 40 hours, but was encouraged
to work more.
-
The TSA, according to
Mr. Louro, could subcontract.
-
The TSA was not obliged
to work exclusively for Acanac.
-
The TSA was not
required to request vacations, though there was an expectation to do so as a
courtesy.
-
The TSA provided their own
invoices.
-
The independent
contractor written agreement.
b) Those factors that
suggest control by Acanac and therefore an employment relationship:
- while no formal
performance review, the TSA’s were monitored through QueueMetrics to the point
if it could be seen they were not answering the phone, they would be asked why.
-
Acanac could listen to
calls after the fact to monitor work performance.
-
Acanac provided the
troubleshooting tools necessary as to how to deal with calls and tickets.
-
According to the TSA’s,
they were required to request time off.
-
According to the TSA’s,
subcontracting was never brought up: it would have been impractical.
-
Supervisors or team
leaders were available for assisting with difficult calls.
-
TSA’s, while receiving
increases in hourly wages, claim they were not as a result of any negotiation.
-
TSA’s considered being
on Spark as a necessary requirement of the job.
-
TSA’s relied on what
they considered Acanac forms of invoices, as well as a clock-in system for the
monitoring of time.
-
Mr. Westcott claimed
that if mistakes were made they would be reprimanded.
[27]
All these factors
pointing one way or the other must be put in the context of a relatively loose
overall arrangement, so strict controls are not overtly evident, but I am
satisfied that on balance there was an element of control not found in an
independent contractor arrangement. What really tips the scale on an otherwise
relatively even playing field is that Acanac did provide its TSA’s with a
system as to how to do the job, by not only providing troubleshooting tools at
the outset, but by ongoing communication through Spark as well as the
monitoring of calls even to the point of listening to calls for which they
received complaints. This suggests to me that even in this informal arrangement
there was some hands-on control by the employer. Further, although I will make
this point again under the "tools" factor, my impression was that the
TSA’s learned primarily on the job. Again, this is not indicative of an independent
contractor arrangement. Overall, I find this factor on balance points to
employment.
Tools
[28]
The TSA’s provided the
computer, microphone and headphones. Acanac provided the software programs and
passwords to get into the necessary sites. It is a relatively even split.
Acanac argues that the most valuable tool, however, in a computer industry such
as this, that a worker such as a TSA can bring to the table is the TSA’s
computer expertise – his knowledge. There is nothing more valuable than that
and that is why the TSA gets the work, not simply because he has a computer.
What this argument fails to address in the circumstances before me is that
firstly, neither Mr. Mouland nor Mr. Westcott started with any great computer
expertise, nor did the job requirements demand it, notwithstanding
Mr. Louro’s suggestion to the contrary. Acanac advertised simply for
general computer knowledge.
[29]
This is quite a
different situation from the case of Edward Asare-Quansah v The Minister of
National Revenue
where I implied in obiter that in certain circumstances, pre-existing
knowledge might be a factor. My clear impression was that the training provided
by Acanac, along with what was significant on-the-job training was indeed how
the TSA’s obtained their knowledge. One would expect an independent contractor
would bring the expertise to the position: on-the-job training, as indicated
earlier, is an employment-like factor. I conclude that ownership of tools
does not conclusively point one way or the other.
c) Chance of profit/risk of loss
[30]
The Appellant argues
that the TSA faces significant risk in loss of reputation due to internet
postings and that that factor clearly demonstrates the TSA was in business on
his own behalf. I have already addressed this in considering the control aspect
on this point. No doubt reputation is important, and it can impact on one’s
future earning potential. But in this case, I am not dealing with positions
with such import and expertise that anyone with some minimal computer knowledge
and a pleasant voice could not handle. It is not work based on reputation. I
have not been convinced the TSA was running any greater risk of loss,
suggesting he was an independent contractor, than if he was an employee. If his
reputation is damaged, it would hurt him equally in finding work as either an
employee or independent contractor. This is not a significant factor in the
circumstances before me.
[31]
With respect to the
chance of profit, the TSA’s were paid by the hour – more hours more pay. As
indicated in the case of City Water International Inc. v Canada (Minister of National Revenue – M.N.R.):
24. On the present facts, in my analysis, the chance
of profit was entirely City Water’s. The Service Workers were guaranteed
an hourly wage and were subject to an incentive bonus. While it is true
that the workers could earn more if they worked more hours, the jurisprudence
is clear that that does not constitute a chance of profit (see Hennick
at paragraph 14). While they may have had an incentive to work harder and
get paid an extra $200, this is not the same as the commercial risk of running
a business. …
The same holds true here. The chance of profit lay
entirely with Acanac. This factor points to an employment relationship.
Other factors
[32]
Some other factors to
consider are that the TSA never filed for GST purposes, nor appeared to have
any other trappings of being self-employed. They did though file as though they
received business income rather than employment income. These were young men at
the time with little experience, being advised by Acanac that they were to
consider themselves independent contractors: they filed accordingly. These
other factors do not persuasively point to an independent contractor
arrangement.
[33]
This is a close call. I
say that because it is clear the TSA’S felt they were being mistreated by being
pegged as something they felt was incorrect. While I have found, on
balance, they have been proven right, it has not been straightforward. I
attribute no malicious or bad faith to Acanac: they wanted an independent
contractor relationship but ultimately the working relationship did not match
that want. The overall impression is that the TSA’s were not in business on
their own account. There was only one business here and that was the business
of Acanac. The Appeals are therefore dismissed.
Signed at Ottawa, Canada, this 16th day of May 2013.
"Campbell J. Miller"
APPENDIX A
Excerpts from the
Independent Contractor Agreement
"Whereas:
2.
The Contractor is a
telephone support specialist with expertise in telecommunication and the
internet and specifically in sales and services relating to them:
3.
The company wishes to
engage the Contractor to provide the Services set forth in Schedule “A” (the
“Services”).
1.
Service Requirements
(1)
The Contractor agrees
to provide the Services to the Company during the term of the agreement
according the highest standard of the industry as determined by the Company in
its discretion reasonable applied.
(2)
The Contractor agrees
to maintain records as required and specified by the Company and to provide
reports to the Company concerning the Services provided and the Contractor
further agrees that all such records and reports shall be and remain the
property of the Company. The Contractor also agrees to maintain detailed and
accurate records of time spent and services rendered and to submit such records
to the Company in the manner requested by the Company, but at least twice per
year and at most on a monthly basis.
2.
Payment for Services
(1)
The Company shall pay
the Contractor engaged in providing Services the sum of ______Dollars
($_____.00) per hour. Or such sums as shall be agreed upon by mutual
consent. The Contractor agrees to be available for work approximately 40 hours
per week in total 52 weeks per year.
(2)
The Contractor shall be
responsible for all expenses incurred by him related directly or indirectly to
the performance of the Services pursuant to this agreement except as
specifically set fourth otherwise in this agreement.
(3)
The Contractor shall
provide such services as an independent contractor and shall not be deemed to
be an employee for any purpose. In providing services as a contractor pursuant
to the terms of this agreement the Contract shall have full discretion as to
the manner of providing services and the nature of the services required and
shall render such services in accordance without the highest professional
standard.
5. Expenses
All expenses in connection with the Contractor’s
performance of this Agreement and its activities as sales and service representative
for the Company, including but not limited to travel, automobile, salaries and
supplies shall be borne by the Contractor and the Contractor shall be solely
responsible for the payment thereof.
6.
Obligation of
the Contractor.
To provide the Services set fourth in Schedule “A”
with the following equipment:
a)
to provide a modern
computer.
b)
to provide basic
computer skills.
c)
to provide a fast
internet connection, such as a DSL or cable modem.
d)
to provide recent
computer operating system releases, such as the latest version of Microsoft
Windows or Linux.
e)
to provide recent
releases of Internet and email applications, such as Internet Explorer and
Microsoft Outlook.
f)
to provide excellent
“people skills” to properly deal with customers in English.
7. Obligations of the Company
The Company shall:
a)
provide the Contractor
with a Voip ATA so tech support calls can be routed to your location.
b)
pay for the
Contractor’s internet high speed access that is used with our Voip ATA adapter.
c)
Provide the Contractor
with full training.
8. Manner of Providing Services
In supplying service the
Contractor will:
a)
provide, except to the
extent expressly set out herein to the contrary, all necessary tools,
equipment, labour and supervision and will be solely responsible for and will
pay all costs relating to same.
b)
abide by all applicable
laws, by laws rules and regulations of all competent authorities.
c)
be free to choose
location at which it will provide the Services
d)
be free to use any
computer set up that they have on condition that it can provide the Services
and establish and maintain the necessary contact with the Company and the
sufficiency of the contact provided by the Contractor shall be determined by
the Company in its discretion reasonably applied.
e)
be free to chose any
shift it may prefer to provide the services. The shifts shall be either from 9
AM to 5 PM or from 4 PM to 12 PM (Midnight) Monday to Friday (Canadian federal
statutory holidays excluded)
f)
be free to carry out
the Services in any manner that it may choose subject to the restriction that
it must carry out the services during its chosen shift.
SCHEDULE “A”
THE “SERVICES”
Phone support specialists that will on the
highest level in the industry:
a)
provide technical
assistance.
b)
answer sales questions.
c)
advise customers.
d)
interpret problems.
e)
provide technical
support for hardware, software, and systems.
f)
answer telephone calls
and Emails.
g)
analyze problems by
using automated diagnostic programs, and,
h)
resolve recurring
difficulties."
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