A new Ontario Labour Relations Board (“OLRB”) decision, Britney Lozza v. Jason A Tereszko operating as Northern Nerds, 2020 CanLII 62081 (“Northern Nerds”), has once again found that a supposed “independent contractor” was actually an employee. This entitled the worker to Employment Standards Act, 2000 (“ESA”) benefits. This decision stands as the latest caution by the OLRB against presuming that a worker is an independent contractor if their working relationship actually resembles that of an employee.
Background
The complainant, Ms. Lozza, had contracted with the respondent, Mr. Tereszko, to perform computer repair work for his information technology business, Northern Nerds. Her contract stated that she was an independent contract and that she was responsible for all expenses and deductions connected to her work. She was paid piecemeal rates based on the number of tasks she invoiced to Northern Nerds.
Ms. Lozza worked for Northern Nerds for 3 years, earning approximately $24,000 over this period. After her work for Northern Nerds ended, Ms. Lozza brought an ESA claim for public holiday pay, vacation pay, and termination pay. Before this, however, she informed Mr. Tereszko that she believed he had violated her rights and threatened to file a claim, unless he paid her a settlement of $XXXX. Mr. Tereszko viewed this threat as harassment and extortion and he made a complaint with the police and with her college.
Ms. Lozza’s efforts at settlement spurned, she brought a complaint under the ESA to the OLRB, seeking unpaid vacation pay, public holiday pay, termination pay and damages for reprisal.
OLRB Analysis
In considering Ms. Lozza’s case, the OLRB relied on its well established approach for determining whether a worker is an employee or an independent contractor under the ESA. The core question is whether the worker is engaged in the work as a person in business on their own account. Factors that the OLRB will consider in deciding this include (but are not limited to) the following:
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- Whether the worker provides their own equipment,
- The degree of financial risk and chance for profit undertaken by the worker,
- The ability of the worker to hire their own help, and
- The responsibility of the worker for investment and management.
The OLRB was very clear that the actual substance of the relationship is what matters – that means that parties cannot avoid an employment relationship by simply agreeing that a worker is an independent contractor.
Factors Supporting a Finding of “Employee Status”
In this case, the reality was that Ms. Lozza was an employee. The relevant evidence was:
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- Lozza’s tools were almost entirely provided by Mr. Tereszko and she worked out of his place of business.
- She took directions from Mr. Tereszko and work assignments from him as he saw fit, such that she had no responsibility for investment or management.
- She had no say in her remuneration and worked exclusively for him, indicating that she had no opportunity for profit or risk through her own work.
- She did not hire any helpers.
- Tereszko himself viewed the relationship as in fact being one of employment, referring to her as an employee of Northern Nerds in correspondence to her. He also provided promotional materials for her to use on behalf of Northern Nerds.
Award
The OLRB awarded Ms. Lozza $960 in vacation pay (4% of wages), did not award public holiday pay due to a lack of records that would allow them to make that calculation, and determined that Ms. Lozza was not entitled to termination pay because she in fact resigned from the position to go back to school (as opposed to being fired). It also found that Mr. Tereszko had reprised against Ms. Lozza by filing a criminal complaint, and ordered him to pay her $2500 for pain and suffering.
Lessons
This case stands as yet another reminder that organizations (and families hiring private support workers) must be extremely cautious when engaging workers as independent contractors. Merely having a contractor agreement in place, even if perfectly crafted, will not be sufficient to prevent employment related liability if a worker’s true working relationship is more like that of an employee. When entering into work relationships with an “independent contractor”, it is always a good idea to consult legal counsel to ensure your arrangement is legally sound.
PooranLaw will continue to monitor legal developments related to independent contractor relationships. In the meantime, if you require legal assistance, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.
Note: This article provides general information only and does not constitute, and should not be relied upon as, legal advice or opinion. PooranLaw Professional Corporation holds the copyright to this article and the article and its contents may not be copied or reproduced in any form, in whole or in part, without the express permission of PooranLaw Professional Corporation.
