Alberta employer had legitimate business reasons for cost-cutting, but decision wasn't a 'slam dunk'
A recent Canadian Human Rights Tribunal decision that dismissed a worker’s discrimination complaint was a victory for the employer, but it was still risky to terminate a worker with a medical condition, says Paulette Haynes, an employment lawyer with Haynes Law Firm in Toronto.
“The employer was fortunate that the outcome came out this way – this was a risky case,” says Haynes. “Anytime you have a terminated employee where there's that disability context, in my view, it's not a slam dunk either way.”
The worker worked for Loomis Express, a shipping company based in Brampton, Ont., picking up and delivering freight in Slave Lake, Alta. He worked as an owner-operator who was paid based on the number of pieces of freight he delivered. The worker did business as WB Enterprises and filed his personal taxes under the same name, deducting his business expenses.
Loomis paid him under the WB Enterprises name and didn’t make any source deductions or provide any benefits or vacation pay. The worker used his own truck and a portable scanner provided by Loomis.
The worker quit in 2005 after a family tragedy, but he returned about one year later after a Loomis manager asked him to come back. However, soon after his return, he suffered a heart attack. He was off work for about three months.
The worker claimed that he signed a written contract when he returned in 2007 and it was agreed that he would be paid a flat rate of $500 per day. He continued to use his own truck and a Loomis portable scanner.
The worker had a second heart attack on Jan. 21, 2016. His manager visited him in the hospital and told him that his job would be waiting for him when he returned. The worker was medically restricted from driving for three months, so his route was covered by an independent courier agent for two weeks and then hourly relief drivers for another three weeks. After that, an independent courier agent covered the route.
While the worker was off work, Loomis began experiencing financial pressure and negotiated rate reductions for its independent agents. The agent who was covering the worker’s route was paid $425 per day and had to include warehouse cleaning that had previously been done by a cleaning company whose contract Loomis had terminated to cut costs. The company also reduced the number of hourly paid employees.
Inflammatory letter damaged trust
Loomis informed the worker that when he returned, he would have to accept the reduced rate. The worker accepted the terms in a letter, but he indicated that he wasn’t pleased – writing that “You’ve backed me into a corner and I have no option but to accept your terms.” The worker also said that he expected that the other contractors also received rate reductions and if they didn’t, “I must treat this as discrimination and disciplinary action due to the above health situation.”
The manager felt that that the letter was inflammatory and caused him to lose trust in the worker. Loomis contacted the worker by phone in early April and terminated the business relationship with WB Enterprises.
Read more: The Supreme Court of Canada confirmed that an employer can terminate an employee with a disability for non-discriminatory reasons.
The worker filed a human rights complaint claiming that Loomis discriminated against him in his employment because of his heart attack or age. Loomis argued that it didn’t treat him differently based on his characteristics and he wasn’t an employee under the Canadian Human Rights Act anyway.
The tribunal found that the worker’s second heart attack and recovery constituted a disability under the act and his termination caused an adverse impact in his employment. However, it also found that, based on the manager’s visit and the company’s use of temporary replacements, there was no indication that Loomis intended to replace the worker.
The tribunal also found that there was no evidence that the termination of the business relationship was related to the worker’s heart attack. The evidence showed that Loomis intended to bring the worker back and only terminated him after the inflammatory letter. In addition, it was clear that the rate decrease was for all agents, not just the worker, and Loomis made other cost-cutting decisions to support its claim of financial pressure, said the tribunal.
“I think the company made a more compelling argument for the proposition that the termination was not related to his disability, and they laid it out more persuasively in terms of identifying things like the financial pressures that the company was facing,” says Haynes.
“[The worker’s manager at Loomis] talked about the fact that they were all under pressure as managers to look for cost-saving measures, reducing the daily rates of the workers from $500 to $425, reducing employees, cutting things like cleaning services, and so on.”
Employee versus contractor
The tribunal determined that Loomis did not discriminate against the worker. It also found that the worker wasn’t an employee, as he wasn’t bound exclusively to Loomis, even though all his work was with the company. The business relationship also didn’t require him to personally deliver the services and the worker used his own truck, paying for his insurance, gas, and maintenance. Loomis didn’t set specific hours of work, subject the worker to discipline, or approve his vacation as long as he had relief drivers to replace him.
Finally, the worker didn’t wear a Loomis uniform or display any Loomis gear while he worked. Loomis had limited control over the worker, and the evidence indicated that both sides treated the relationship as one of an independent contractor providing services, said the tribunal in dismissing the complaint.
Read more: Signing a contract stating that workers are independent contractors doesn’t mean they actually are if the circumstances say otherwise.
Haynes notes that whether contractors are considered in an employment relationship depends on the jurisdiction and the circumstances of the relationship. The worker wasn’t an employee under the Canadian Human Rights Code definition, but it may have been a different story for a complaint under the Canada Labour Code, she says.
“Whether somebody is going to be characterized as an employee or an independent contractor is going to be dependent on the facts of each case,” she says. “If the parties intend it to be an independent contractor relationship, there should be an agreement that lays that out.
“That being said, the agreement alone is not determinative enough – there are a number of variables if the employer intends for this relationship to be an employer-employee agreement.”
Tread cautiously with disabilities
Haynes reiterates that although the tribunal determined that the worker’s disability wasn’t a factor in his dismissal, employers should act cautiously whenever an employee has a disability.
“From the employer’s perspective, have your facts and documentation ready to support why a termination has been made that is unrelated to the disability,” says Haynes. “They have to be very clear on that, have it well documented, because it could go the other way.”
Even when an employer has legitimate business reasons to dismiss an employee, it must be ready to prove it if the employee claims discrimination, adds Haynes.
“Just saying, ‘We had financial reasons’ on the face is not enough – in this case, the employer was able to establish concretely that there were these financial pressures and some of the things that the company was doing,” she says.
“The employer really has to lay those things out, have their documents in a row, have those steps laid out, so they can really show that they’re not saying ‘business reasons’ just out of convenience, but that there are really circumstances and steps to take, and it's totally separate from the alleged grounds of discrimination.”
The complaint was dismissed. See Fick v. Loomis Express, 2022 CHRT 2.
