Employer claimed worker hired as contractor, but controlled much of relationship
The Ontario Labour Relations Board has overturned a decision finding that a worker was an independent contractor and isn’t owed unpaid wages or vacation pay.
Swift Electrical is a company providing electrical services residential and commercial locations in Toronto and Hamilton. In December 2019, Swift’s owner was looking for a certified electrician to do some work and a supplier gave him the worker’s contact information.
The owner called the worker and asked if he was available for work and the worker said he would do jobs for him on an hourly basis. According to the worker, they agreed to $39 an hour. The worker said that the owner told him that he would be paid bi-weekly and he would work at least 44 hours per week while being available at all hours. There was no written agreement.
According to the owner, he told the worker that he could only pay $18 per hour and the worker agreed because he needed the money and had no other work, although he also said the worker said he wouldn’t be available all of the time due to other jobs. He met the worker at a job site the next day and he paid the worker in cash with no invoices for the work. Whenever he had additional work he gave it to the worker with hours set to meet the client’s requirements.
The worker received information on jobs and hours through text messages and the owner inspected the worker’s work at the end of jobs. The worker had his own tools, but often used some from the owner’s more extensive stock when they were needed. The worker also wore a uniform with Swift’s name on it.
Independent contractor?
The worker claimed that the owner told him that he would pay workers’ compensation premiums, but ultimately Swift didn’t make any deductions or provide paperwork. He made notes about work performed in a notebook kept in the owner’s van. Sometimes the worker drove himself to a work site and sometimes the owner drove him.
The owner claimed that he didn’t expect the worker to only work for him and he paid the worker in cash at the end of a job based on the number of hours it took. He said he requested invoices from the worker, but the worker didn’t provide them.
The supplier who introduced them at his home agreed that the worker wanted 44 hours per week and Swift’s owner agreed that there was enough work available. He also said that the owner told the worker that he was not to work for others at the same time and he would be paid every 15 days.
The worker was paid a total of $3,500 in three separate payments, but Swift’s owner repeatedly told him that the customers weren’t paying. He promised to pay the rest of what the worker was owed once customers paid up. According to the owner, he generally bought the supplies but the worker may have done so “on occasion,” for which the owner said he paid the worker back.
The worker’s last day working for Swift was March 11, 2020. One week later, the worker texted the owner to ask “What’s the plan?” On June 1, he called the owner asking for payment and the owner responded that he needed a statement from him indicating payments received before going over what was owed.
On July 5, the worker texted again to say it was his final request for payment before taking legal action.
Complaint for unpaid wages, termination pay
The worker made an employment standards complaint claiming that Swift owed him more than $31,000 in outstanding wages, vacation pay, and termination pay – he said he worked 810 hours, including 210 hours of overtime at $39 per hour. He claimed that the owner had only paid him $3,500 and he used $500 of that to buy materials.
The supplier agreed that the worker was owed around $30,000 and the owner said he would pay the worker on condition that he became a 50 per cent partner with him, which the worker didn’t want to do. The supplier also reported that he understood that they had agreed to a $39 hourly wage rate.
An employment standards officer determined that the worker was an independent contractor and declined to order Swift to pay outstanding wages, vacation pay, or termination pay. The worker appealed to the board, arguing that he was an employee.
Swift’s owner argued that they had agreed that the worker would submit invoices for the work he did, but he never did. He also pointed out that the worker waited several months before claiming that he was owed money, taking the position that the worker was an independent contractor who was paid in cash at the end of every job.
The board noted that the Ontario Employment Standards Act, 2000 (ESA) defined “employee” as someone “who performs work” or “supplies services” to an employer for wages. It also referred to the Supreme Court of Canada’s comment that there was no universal test to determine if someone is an employee or an independent contractor, but factors such as the level of control the employer has over the worker’s activities, equipment, and financial risk should be considered.
Signs pointed to employment relationship
The board found that when the worker and the owner were introduced, they agreed to wages, hours, pay periods, and that the owner was in charge of work assignments. This was indicative of an employment relationship, the board said, adding that the lack of documents or accounting statements showed a “relaxed” approach to documentation that provided no insight into the lack of tax remittance from the worker’s pay.
The board also found that, while start times could be fluid, Swift’s owner always decided when they were. Overall, there was a pattern of Swift controlling the worker, said the board.
In addition, the worker didn’t turn down any assignments and was never unavailable to work for Swift, while the owner obtained and communicated with clients, quoted the work to be done, provided some of the tools necessary to perform the work, and determined the worker’s pay according to how many hours worked. The worker had no chance of profit or a risk of loss, which were also the earmarks of an employment relationship, the board said.
The board determined that the worker was not in business for himself and was an employee of Swift.
Worker resigned
However, there was no evidence showing that Swift terminated the worker’s employment and it was more likely that the worker resigned, removing any entitlement to termination pay, the board said. As for unpaid wages and vacation pay, there was a disagreement over the wage rate to which they had agreed.
The board found that Swift’s owner’s claim that the worker agreed to $18 per hour wasn’t credible, as he didn’t provide any evidence on what he actually paid the worker and was inconsistent on whether it included HST. In addition, the supplier who introduced them supported the worker’s claim it was $39 per hour and the owner was also inconsistent in saying that the worker accepted the lower rate because he had no work, when he had also said that the worker had other work.
Given the lack of documentation of the worker’s pay, the board remitted the matter to the parties to determine how much the worker was owed. If they were unable to resolve it, they had one month to bring the matter back to the board. See Grover v. Swift Power Electricals Inc., 2024 CarswellOnt 2378.
