“Worker” vs “independent operators” distinction clarified in Newfoundland and Labrador workers’ compensation decision
Is a worker under a contract “of” service or contract “for” service? The former means a worker is an employee whereas the latter means a worker is an independent contractor. The answer to that question has significant consequences for employers and workers alike. In the context of the Newfoundland and Labrador Workplace Health, Safety and Compensation Act (“the Act”), it determines whether employers must pay premiums for its workers, which are often significant.
As some businesses struggle to make ends meet with these rising costs, WorkplaceNL’s Injury Fund is funded by 123.4 per cent from employer premiums.
There has been an increased trend in which employers have to pay premiums for workers properly classified as independent operators – even in contexts where the employers do not even have “workplaces” where workers could be injured. We expect this to become more common as remote workplaces increase.
Stewart McKelvey St. John’s lawyers Twila Reid and John Samms successfully argued before the Workplace Health, Safety and Compensation Review Division (“WHCRD”) at External Review that insurance sales agents under contract to sell insurance policies to customers are not “workers” as defined under the Act – they were properly considered “Independent Operators”, otherwise known as independent contractors. This result overturned two prior lower level decisions whereby WorkplaceNL and the WHCRD Internal Division held these sales agents were “workers”.
In the decision, the review commissioner determined that that the workers were not “workers” under a contract of service because:
- The employer’s business model was such that the initial sale of insurance was separate and apart from the rest of the business – which was the renewal of already existing business. The role of the agents in the employers business was therefore separate and distinct – the sales agents made first contact, but the employer had the burden of maintaining that business. Viewed through this lens, the first-contact sales agents were not necessarily integral to the business’ success.
- More importantly, the employer did not exercise sufficient control over the agents in how they conducted their business, their right to sell products for multiple companies, and their overhead costs for which they were responsible. The decision is noteworthy and may be of interest to employers across Atlantic Canada given the legislative similarities across Atlantic Canada.
If you feel your business may have been wrongly classified for workers’ compensation purposes, the Labour and Employment group of Stewart McKelvey would be pleased to assist you.
This update is intended for general information only. If you have questions about the above, please contact a member of our Labour & Employment group.
Click here to subscribe to Stewart McKelvey Thought Leadership.
By Kimberly Bungay On April 1, 2023, the Nova Scotia government will proclaim into force Bill 226, which amends the Companies Act (the “Act”) to require companies formed under the Act to create and maintain…Read More
Abuse of sick leave / failure of employee to participate in accommodation process: Vail v. Oromocto (Town), 2022 CanLII 129486
By Chad Sullivan and Kathleen Starke Background A recent decision, Vail v. Oromocto (Town), 2022 CanLII 129486, involved several grievances including an unjust dismissal claim by a firefighter as well as a grievance filed by…Read More
By Stuart Wallace and Kim Walsh On January 1, 2022, the Underused Housing Tax Act (the Act) took effect. The Underused Housing Tax (the UHT) is an annual 1% tax on the value of vacant or…Read More
Parlez-Vous Francais? Recent amendments to Quebec’s Charter of the French Language may impact Atlantic Canadian businesses
By: David F. Slipp and Levi Parsche In May 2022, Bill 96 was adopted by Quebec’s National Assembly, significantly amending the Charter of the French Language (the “Charter“). The amendments create new requirements for using…Read More
The Winds of Change (Part 7): Paying the Piper: New Newfoundland and Labrador Fiscal Framework expects billions in revenues from wind to hydrogen projects
By Dave Randell, G. John Samms, and Stuart Wallace With the deadline for bids on crown lands available for wind energy projects extended to noon on March 23rd, the latest development in our Winds of…Read More
By Kevin Landry and Colton Smith The Retail Payment Activities Regulations have been released in the Canada Gazette Part 1 for comment. Interested persons may make representations concerning the proposed regulations for a period of 45…Read More
By Andrew Burke, Colleen Keyes, Gavin Stuttard and David Slipp With proxy season once again approaching, many public companies are in the midst of preparing their annual disclosure documents and shareholder materials for their annual…Read More
By Brittany Trafford and Sean Corscadden In response to the nationwide labour shortage, the Federal government is allowing select family members of foreign workers to apply for open work permits. This temporary policy came into…Read More
Mark Tector and Ben Currie Effective January 1, 2023, amendments to Ontario’s Employment Standards Act, 2000 (“ESA”) took effect, excluding “business consultants” and “information technology consultants” from the application of the ESA. This is a…Read More
By Perlene Morrison, K.C. and Curtis Doyle Once again, the time has come to review the year that was and to chart the course for the year ahead. For municipalities and planning professionals in Prince…Read More