REASONS
FOR JUDGMENT
Boyle J.
Introduction
[1]
The issue in these four informal appeals heard
together is whether two individuals working at Connor Financial Services
International Inc. were engaged in insurable employment and pensionable
employment for purposes of the Employment Insurance Act (“EI Act”) and
the Canada Pension Plan (“CPP”) respectively. Neither of the two workers
intervened in these appeals, although as described below one appeared as a
witness.
[2]
Mr. Connor is the controlling shareholder,
the sole director and the President of Connor Financial Services International
and Connor Financial Corporation. The workers worked for Connor Financial
Services International, but the operations of Connor Financial Services
International and Connor Financial Corporation, along with other related
companies, were carried on more or less collectively from the evidence as what
I will call “Connor Financial”. In the years in question, Connor Financial did
not include a licensed mutual fund dealer as it no longer held that
registration. Mr. Connor continued to be a licensed investment advisor and
Connor Financial trades were effected through an unrelated third party
registered mutual fund dealer. Mr. Connor testified on behalf of Connor
Financial.
[3]
The worker with the greater seniority was Piyanard
Thantasanee. Her position at Connor Financial was her first job after
immigrating from Thailand. She did not testify although efforts had been made
by at least one of the parties to contact her in order to arrange for her
testimony. Those efforts were not successful in locating her. The other worker,
Mariel Wendowsky, testified. Her position at Connor Financial was her first job
following her university graduation and it was her first full‑time job.
[4]
The parties agree that the question to be
decided in these appeals is whether these two workers were employees or
independent contractors of Connor Financial in the years in question. The
parties do not dispute that the question to be decided in law is whether these
two workers were in business for their own account as set out in the Connor Homes and other decisions, and that
this is to be decided having regard to the parties’ intentions and the several Wiebe
Door
considerations or factors.
[5]
In addition to the testimony from
Mr. Connor and Ms. Wendowsky, the Crown also called Ms. Lee, a
Canada Revenue Agency (“CRA”) representative who was the rulings officer in the
case of one of the two workers. Ms. Lee’s testimony included a description
of how the rulings process proceeded, as well as the CRA review and objection
stages. She informed the Court that Connor Financial through Mr. Connor
had declined to provide any information, answer any questions or complete the
questionnaire as part of the rulings process, but that he did provide written
answers to a written questionnaire at the objection stage. The rulings
determined that the workers were employees, and this was upheld or confirmed on
objection.
[6]
Ms. Lee was an entirely credible witness
with respect to the review, rulings and appeals processing of the
characterization of the work relationship between Connor Financial and these
two workers.
[7]
Ms. Wendowsky testified in a very candid
and forthright manner and I found her to be consistent and credible in all of
the relevant parts of her testimony germane to my decision in these appeals,
including her testimony as to the role, responsibilities and activities of her
colleague at Connor Financial, Ms. Thantasanee.
[8]
I have some real credibility concerns with
Mr. Connor’s testimony given particularly, but not exclusively, his
testimony regarding the workers preparing invoices for contract work to Connor
Financial as well as submitting their time sheets in accordance with Connor
Financial’s written requirements to get paid. His lack of candour about his
past regulatory problems was also significant. He said he and the regulator had
some past discussions about regulatory concerns. It turned out there was a B.C.
Supreme Court decision in which Connor Financial was found to have engaged in
unconscionable financial transactions with its clients. My concerns about the
invoices in particular are very significant, and therefore there is a carry‑over
concern to some degree about all of his testimony on material points and I
prefer the testimony of the other two witnesses wherever his departs from
theirs.
[9]
It is my finding that on a balance of
probabilities neither of the two workers submitted the invoices provided to the
Court by Connor Financial. I find they were probably prepared by someone else
at Connor Financial, and likely Mr. Connor, and if not Mr. Connor,
likely his bookkeeper with his knowledge. Invoices are not mentioned in the
written rules for getting paid set out by Mr. Connor in Connor Financial’s
time sheets below. Also, only a time sheet is asked for by Mr. Connor in
his written response to Ms. Wendowsky’s resignation from work; he does not
request an invoice. I found his explanation that the copies of the invoices
provided to the Court which have an accounting stamp indicating the worker was
paid and often where they were posted in the financial records of Connor
Financial would not reasonably have been given back to the worker who he says
prepared the invoice when the invoice is paid by cheque. Ms. Wendowsky was
categorical that she absolutely did not prepare invoices at any time nor ever
think she was expected to.
Intention of the Parties
[10]
Ms. Wendowsky testified that
Mr. Connor did not ever tell her that she was a contract worker or self‑employed
worker. He says he did. She acknowledged she had been told by an earlier
interviewer that she would be paid as a contractor. She said she did not really
know what that meant apart from being told she should put aside money for her
taxes.
[11]
As I said in the Loving Home Care
decision,
it would be hard in circumstances such as these to place much weight on the
intention of the parties even where it may have been dictated at the outset if
the worker does not in fact understand the difference:
3 The
applicable law in appeals such as these is fully and clearly set out by the
Federal Court of Appeal in 1392644 Ontario Inc. (Connor Homes) v. Canada
(National Revenue), 2013 FCA 85. I will not reproduce all of paragraphs 23
and 33 through 41 of Justice Mainville’s reasons.
4 The legal
issue to be decided is simply whether an individual worker is performing her
personal care worker services as her own business on her own account.
5 This requires
me to first decide whether subjectively, based upon the facts, circumstances
and evidence in the particular case, there was a mutual understanding or common
intention between the parties regarding their relationship as either employment
or independent contractor.
6 At this
stage, a Court can consider, among other things, the extent to which a worker
understood the differences between an employment or independent contractor
relationship, the relative bargaining position strengths and weaknesses, and
the extent to which such evidence, which can typically be expected to be self‑serving,
is corroborated by and consistent with the other evidence placed before the
Court.
7 The answer to
this question is not determinative. The parties cannot agree to the correct
legal characterization of their work relationship as if it were just another
term or condition of their work relationship rights, obligations, duties and
responsibilities. A declared and agreed intent to a particular characterization
of the work relationship as employment or independent contractor must, in fact,
be grounded in a verifiable objective reality.
8 If the
parties have a common agreed intended characterization of their relationship,
this Court must determine if the overall objective reality of their working
relationship sustains, and is consistent with, their subjective intent.
9 This second
step requires the Court to consider and weigh the traditional Sagaz/Wiebe
Door factors of control over the work and the worker (including the extent
of subordination of the worker), the provision of tools, material,
credentialing and equipment needed for the worker to do the work, and the
extent of the worker’s financial upside and downside risks regarding the
services provided by her.
10 In this
second step, the Court may again consider the parties’ intent, along with the
actual behaviour of the parties and any written agreement between them. In Royal
Winnipeg Ballet v. M.N.R. (F.C.A.) the Federal Court of Appeal had
similarly said the traditional Sagaz/Wiebe Door factors must be
considered “in the light of the parties’ intent.”
11 This second
step is otherwise the same as how the Court would proceed in cases where there
is no common shared intention regarding the characterization of the work
relationship by the parties.
. . .
27
. . . As a general principle, workers who are not informed and do not
actually know or understand the differing possible characterizations of their
work relationship cannot make a very helpful self-characterization of the
nature of the legal relationship they have taken on, and certainly not one that
can much enlighten or inform the Court’s objective consideration of the
traditional Sagaz/Wiebe Door factors.
28 In the
circumstances of this case, the Court places little weight on the subjective
intentions of the workers to characterize their work relationship as
independent contractors.
[12]
Mr. Connor consistently in his testimony,
and on his version of the interviews with the workers, used the term contract
worker. This would be an ambiguous term. For example, Ms. Wendowsky in her
B.C. Employment Standards complaint actually uses the term “contract employee”
when it is clear she is using it as the term for independent contractor since
she is arguing against it. Another example would be employees who are often
referred to as being on contract in the case of fixed term employees.
[13]
I am not satisfied that there was a shared
intention to be an employee or an independent contractor. I conclude that the
evidence of intention in these appeals is unhelpful and should be given little weight
in characterizing the work relationships. I turn now to the traditional Wiebe
Door considerations.
Control
[14]
Mr. Connor was the sole shareholder and
director and the President of Connor Financial. The other few workers in his
office were his staff. Only Mr. Connor was licensed as an investment
advisor capable of contracting mutual fund transactions.
[15]
At the bottom of the Connor Financial Biweekly
Staff Time Sheet
which the workers were required to complete and comply with, the following
terms of work are highlighted:
1. All overtime
hours must be approved by [Mr. Connor] in advance.
2. Sick time must be
approved by [Mr. Connor] and may require a Doctor’s note.
3. Vacation time must
be approved by [Mr. Connor] in advance. All unapproved or unexplained
absences will be deducted from regular or vacation time.
4. Give details of any
non-lunch time absence. Lunch is 30 minutes and must be staggered so that
two staff are not absent at the same time.
5. Provide details of
any absences. Use back of page if needed and date.
This form must
be properly completed in full and turned in to be paid. Due to the bookkeeper’s
schedule, adjustments may be reflected in the following pay period. Put on
[Mr. Connor’s] desk at 5pm each day.
Start time 8:30AM. Depart time 5:00PM. *You
may use 24 clock, otherwise indicate am or pm.
[Emphasis in original.]
[16]
It can be noted that the Biweekly Staff Time
Sheet of Connor Financial required the workers to track regular hours, overtime
hours, sick hours, vacation hours and there was a box for Mr. Connor’s
initials each day. It does appear that in practice in the period in question they
were only submitted to Mr. Connor at the end of the pay period and not
daily. However, it is the right and ability of Connor Financial to control and
direct the performance of duties that is most significant, not how often the
right was exercised or the extent to which it was exercised. See Loving Home
Care, above, and Dean (Ana’s Care & Home Support) v. M.N.R.
[17]
Mr. Connor expected the workers to be at
the office during office hours and he had ultimate authority over everything.
He indicated that Ms. Thantasanee did more of the supervision of Ms. Wendowsky
than he did. The characterization of Ms. Wendowsky’s work as employee or
independent contractor would not depend upon which Connor Financial officer or other
staff person or designate supervised her. What is relevant is that her work was
supervised by Connor Financial.
[18]
I find on the evidence that both workers were
trained by Mr. Connor, and in the case of Ms. Wendowsky, by Ms. Thantasanee
and other staff. I do not accept as reasonable or credible Mr. Connor’s
assertion that he simply provided them with a copy of the third party licensed dealer’s
procedures manual and the Mutual Fund Dealers Association rule book and
expected them to function without any further training, practical or otherwise,
on the job or otherwise.
[19]
These two workers were administrative
assistants. In addition, Ms. Wendowsky served as receptionist. She brought
Mr. Connor his daily morning coffee. Their duties and activities as administrative
assistants and receptionist were assigned and supervised by Mr. Connor or
his other staff based on their responsibilities and seniority.
[20]
The workers were told by Mr. Connor to work
overtime during the RRSP season and they did.
[21]
Overall, I find the evidence of control over the
workers and their work to weigh very strongly in favour of an employment
characterization in these cases. Their hours were dictated by, they were
supervised by, they were trained by, and their work was assigned by,
Mr. Connor and his other staff. They were clearly subordinate to
Mr. Connor and from other staff based upon conventional concepts of
seniority.
Ownership of Tools
[22]
All of the equipment and supplies needed by the
two workers to perform their tasks were provided by Connor Financial. On the
evidence I am unable to conclude that any Connor Financial work was done by
either worker on a personal computer or outside the office.
[23]
A consideration of this factor leans in favour
of an employment characterization of the relationship.
Financial Upside and Downside Risks
[24]
The workers were paid at hourly rates. They bore
no expenses, so they could not lose money. They could only make more money for
themselves by working more hours or negotiating a raise.
[25]
The workers did not have the ability to
subcontract any or all of their work to another person. Mr. Connor said he
would instead hire another worker if they needed help.
[26]
A consideration of this factor does not clearly
lean in favour of a worker in business for herself.
Conclusion
[27]
The Appellant has not been able to establish
with sufficient credible evidence that the Connor Financial workers covered by
the decisions were, on a balance of probabilities, in a working relationship
that would be characterized in law as an independent contractor and not as an
employee.
[28]
Given especially the extent of Connor Financial’s
rights to direct the performance of the work duties and its actual monitoring
and reporting requirement practices, and given the very limited financial risks
to the workers, the absence of any financial investment by the workers, and the
relatively fixed financial rewards by which they can only generate more income
by working additional hours or days, these particular facts and circumstances
considered as a whole quite strongly give rise to insurable employment under
the EI Act and pensionable employment under the CPP.
[29] The appeals are dismissed.
Signed at
Ottawa, Canada, this 4th day of December 2017.
“Patrick Boyle”
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