In 2016, the Ontario Court of Appeal confirmed that dependent contractors are entitled to reasonable notice of termination. In a recent decision, Cormier v 1772887 Ontario Limited cob as St. Joseph Communications, (“Cormier“) the Ontario Superior Court of Justice extended this principle – commenting that service as an independent contractor should be considered in calculating the reasonable notice period in certain circumstances.
In rendering this decision, the Court decided that the plaintiff was a dependent contractor and determined her notice period entitlement on this basis. The discussion concerning the notice entitlement of independent contractors was made in passing only and did not form a basis for the decision that was ultimately made.
Cormier serves to remind employers that dependent contractor service needs to be taken into account when determining the notice period for termination “without cause”. The decision also highlights that the distinction between an employee and an independent contractor is not always a clear one and that a service relationship is defined by how the parties actually conduct themselves and not by the titles given to a role (e.g., freelancer, independent contractor, dependent contractor, etc.).
It remains to be seen whether the courts will follow the commentary in Cormier when rendering subsequent decisions. In any case, it is advisable that employers consider including termination provisions in contracts with independent contractors, as well as in contracts with employees.
Kelly Cormier worked for St. Joseph Communications as a “freelance wardrobe stylist” between 1996 and 2004. In 2004, she was hired as a “wardrobe stylist” pursuant to a written employment agreement. Ms. Cormier continued to work for the employer in various roles until 2017, when her employment was terminated on a without cause basis.
The employer had offered Ms. Cormier a combination of working notice and pay in lieu of notice, totaling 34 weeks. The employer took the position that Ms. Cormier was an independent contractor for 10 years of the relationship and an employee for 13 years, thereby justifying the offer that had been made. The employer also argued that the termination clauses in the employment agreements between the parties rebutted the presumption that Ms. Cormier was entitled to reasonable notice.
Ms. Cormier argued that she was a dependent contractor between 1996 and 2004 and that she was entitled to 24 months of reasonable notice.
The Court agreed with Ms. Cormier: she was a dependent contractor between 1996 and 2004 and those years of service should be included in calculating her notice period. In coming to this decision, the Court relied on the factors differentiating dependent and independent contractors in McKee v Reid’s Heritage Homes Ltd., including:
(1) the extent to which the worker was economically dependent on the particular working relationship;
(2) the permanency of the working relationship; and
(3) the exclusivity or high level of exclusivity of the worker’s relationship with the employer.
In Ms. Cormier’s case, the Court emphasized that the nature of her job did not change between the period she was working as a freelance wardrobe stylist and when she was hired as an employee.
However, the Court went a step further and stated that even if Ms. Cormier was an independent contractor between 1996 and 2004, those years of service should still be included in calculating the notice period because “it would be wrong in principle to ignore these years of their relationship in determining the reasonable notice period. The court should take all of the circumstances into account.”
The Court determined that the termination provision in the parties’ most recent employment agreement was unenforceable. Given this, and the determination that dependent contactors are entitled to reasonable notice of termination, the Court awarded Ms. Cormier reasonable notice at common law, which in this case was determined to be 21 months.