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The Final Word on Dependent Contractors

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I wrote last year about the Ontario Superior Court of Justice’s decision in the case of Keenan v. Canac Kitchens (a link to same can be found here:  http://www.employmentandlabour.com/?s=Canac).   Last week the Ontario Court of Appeal upheld the Superior Court’s decision in Canac, and added some additional guidance with respect to the law surrounding dependent contractor relationships.

First, a quick reminder as to the facts of this particular case.  Lawrence and Marilyn Keenan were employed by Canac Kitchens beginning in 1976 and 1983 respectively.  In 1987, both were advised that their employment was coming to an end but that they could carry on as independent contractors.  An independent contractor agreement was signed by Marilyn and the Keenans carried on as before.  They continued working for Canac until the company closed its operations in 2009.  No notice of termination or pay in lieu of notice was provided.

While there were some factors in this case which suggested an independent contractor agreement, the lower court was particularly fixated on the fact that the Keenans worked exclusively for Canac until 2007.  Although they did some small amount of work for a competitor named Cartier between 2007 and 2009 due to a shortage of work at Canac, the judge accepted that Canac turned a blind eye to same.  In other words, for all intents and purposes the Keenans provided services only to Canac for almost the entire duration of the relationship.  Moreover, Canac had almost complete control of the work performed by the Keenans.

As a result, the Superior Court found that although the Keenans were contractors, they were in a dependent relationship to Canac and therefore entitled to notice of termination.  Due to the 32 and 25 years of service provided by Lawrence and Marilyn respectively (which resulted in an average length of service of 28.5 years between the two of them), the court found that a whopping 26 month notice period was reasonable.

Canac contended that the trial judge erred: (i) in finding that the Keenans were in an exclusive relationship with Canac; and (ii) in awarding 26 months of notice.  The Ontario Court of Appeal determined that while the Keenans performed some work for Cartier, the substantial majority of their work was for Canac.  More specifically, of the approximately 32 and 25 years of service which Lawrence and Marilyn gave to Canac, all but two were exclusively in the service of Canac.  The court further stated that the full history of the working relationship between the parties must be examined, and not just a snapshot at the time of termination.

In addition, the Court found that because of the age and length of service of the Keenans, the fact that for over a generation they were Canac’s public face to the outside world, and the fact that their income had come from Canac during the entirety of their working lives, an award in excess of 24 months was justified and the trial judge’s finding for a 26 month notice period was reasonable.

A copy of the Court of Appeal’s decision in Keenan v. Canac Kitchens may be found here:  http://www.ontariocourts.ca/decisions/2016/2016ONCA0079.htm.