Employees are often misclassified as independent contractors, even in unionized workplaces. An individual who has been misclassified at a unionized workplace should go to labour arbitration while a similarly situated individual at a non-unionized workplace can take their case to court or make a complaint at the Ministry of Labour. But what happens if you were misclassified as an independent contractor before your workplace unionized? This question was recently answered by the Ontario Superior Court of Justice in the case Krecisz v. Cascades Recovery Plus.
Mr. Krecisz claimed that despite his 20-year-old independent contractor agreement, he was in fact an employee who had been wrongfully terminated. Monkhouse Law successfully represented him when the company he had worked for tried to defeat his claim by arguing that it was outside of the court’s jurisdiction.
Background
In 2019, the drivers and drivers’ helpers of Cascades Recovery Plus, a division of Cascades Canada ULC and Metro Waste Paper Recovery Inc. (“Cascades”), successfully unionized in Toronto. The union did not include those in the position of supervisor and above, dispatchers, and office and clerical employees.
Mr. Krescisz did not fall under any of these categories. He was engaged by Cascades 20 years prior under an independent contractor agreement as an “Owner Operator Truck Driver”. Sometime after Cascade’s workers had unionized, Mr. Krescisz brought a claim for wrongful dismissal, damages for unpaid overtime pay, vacation pay, holiday pay, and CPP and EI deductions.
The employer brought a motion which argued that Mr. Krescisz claim should be grieved under the union’s collective agreement. The employer argued that if Mr. Krescisz was found to be an employee or dependent contractor, then he would be included in the union’s bargaining unit. If the employer was correct, then Mr. Krescisz would have needed the union to bring his claim before an arbitrator appointed under the Labour Relations Act and the collective agreement.
Misclassification
Misclassification is a serious issue in Ontario. While a true independent contractor enjoys tax benefits and a high degree of autonomy, employers often misclassify workers as independent contractors to avoid their statutory obligations. A misclassified employee will have the duties, obligations, and level of freedom of a normal employee while the employer avoids their responsibility to pay applicable termination pay, severance pay, overtime, vacation pay, holiday pay, and the Canada Pension Plan and Employment Insurance. In a unionized workplace, an employer may engage real employees as “independent contractors” to avoid greater benefits negotiated under the collective agreement and undermine the union’s power.
The main question that courts and labour arbitrators ask when determining if someone is an employee or an independent contractor is: whose business is it? To determine the answer, the decision maker looks at factors such as:
- Whether the worker provides their own equipment
- Whether the worker can hire helpers
- The degree of financial risk taken by the worker
- The level of control exercised by the possible employer
- The worker’s opportunity for profit and risk of loss
This list is not exhaustive and no one factor is determinative. An independent contractor agreement, like the one signed by Mr. Krescisz, is also not determinative as courts and labour arbitrators have recognized that parties can agree to one arrangement but ultimately conduct themselves in an entirely different manner.
Courts or Labour Arbitration for Misclassification?
A collective agreement sets out the terms of the relationship between a union and an employer. In Ontario, labour arbitrators have exclusive jurisdiction over the interpretation of collective agreements. This means that when there is a dispute as to what the terms of the agreement mean, unionized workers cannot go to court for an answer. This includes determining who is and is not in the union.
When a court or a labour arbitrator must determine whether a case is within their jurisdiction, they follow Weber v. Ontario Hydro 1995 CanLII 108 (SCC) and examine whether in its “essential character”, the issue “arises from the interpretation, application, administration or violation of the collective agreement.” The question in this case was whether Mr. Krescisz dispute with Cascade arose from the collective agreement or not.
In Claxton v. BML Multi Trades Group Ltd. 2003 CanLII 34634, the Ontario Court of Appeal determined that in a unionized workplace, the question of whether an individual engaged as an independent contractor or an employee arises from the interpretation of the collective agreement and is a question which should be determined by a labour arbitrator.
In Goudie v. Ottawa (City) 2003 SCC 14, the Supreme Court of Canada held that a dispute regarding a contract made before workers joined a bargaining unit was not rooted in a collective agreement and therefore could be heard in court.
Krescisz v. Cascades Recovery Plus fills the gap between these two cases. It makes it clear that just because a workplace is unionized, that does not mean that misclassification is automatically an issue to be determined under the collective agreement. If the agreement preceded the collective agreement between the union and the possible employee, the court could hear the case. Contrary to what the employer argued, when a contract pre-dates the unionization of a workplace, disputes surrounding it do not arise from the interpretation, application, administration, or violation of the collective agreement.
This decision is important for any similarly situated workers. If the plaintiff was covered under the collective agreement, he would have only been able to ask his union to grieve his dismissal and he would not have been able to pursue the action himself. Instead, Mr. Krescisz can go to court and claim damages which may ultimately be greater than the backpay would have been.
Have You Been Misclassified?
Misclassification can have serious consequences for a worker’s compensation. It deprives workers of their rights to much needed paid time off, reasonable notice prior to termination, and in certain instances severance pay. Misclassification harms workers when they are most vulnerable, by depriving them of Employment Insurance when they are terminated and reducing what they can expect in pension payments in old age. Many workers are led to believe that because they signed an independent contractor agreement, they cannot sue for their employment rights.
Monkhouse Law has significant experience in these matters, including starting Canada’s first misclassification class action. If you suspect that you have been misclassified, don’t hesitate to get in touch with our team. We strive to get optimal results for every client through skilled advocacy and research on each matter. We have successfully represented clients before all levels of court in Ontario, including the Superior Court, the Divisional Appeals Court, and the Court of Appeal and have also appeared before the Supreme Court of Canada.
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