“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.
Archive
In Wood v. Wood et al, 2013 PESC 11, a motion pursuant to Rule 7.08 of the Rules of Civil Procedure for court approval of a settlement involving a minor, Mr. Justice John K. Mitchell approved the settlement among the…
Read MoreClients who sit on boards of corporate employers should take note of recent amendments made to New Brunswick’s Employment Standards Act (the “ESA”) which could increase their exposure to personal liability in connection with claims advanced by…
Read MoreSignificant changes may be coming to the standard automobile policy in PEI, including increases to the accident benefits available under Section B and an increase to the so-called “cap” applicable to claims for minor personal…
Read MoreOn June 17, 2013, pursuant to the recently amended Section 70 of the Labour Relations Act for Newfoundland and Labrador (“NL”), the Government of Newfoundland and Labrador issued three Special Project Orders (“SPOs”) in respect of the…
Read MoreOn June 14, 2013, the Supreme Court of Canada (“the Court”) released the decision that employers across the country were waiting for. In CEP Local 30 v. Irving Pulp & Paper Ltd., 2013 SCC 34, a…
Read MoreThe Government of Newfoundland and Labrador (“NL”) has recently released its “Aboriginal Consultation Policy on Land and Resource Development Decisions” (the “Policy”). A copy of the Policy can be accessed here. This new Policy is the…
Read MoreThe following is a province-by-province update of legislation from a busy 2013 spring session in Atlantic Canada. Watching these developments, we know the new legislation that has passed or could soon pass, will impact our…
Read MoreThe integrity of the jury system has become a pressing topic for our courts of late, with articles about jury duty frequently appearing front and centre in the press. The recent message from the Nova…
Read MoreIN THIS ISSUE: Cloud computing: House to navigate risky skies by Daniela Bassan and Michelle Chai Growing a startup by Clarence Bennett, Twila Reid and Nicholas Russon Knowing the lay of the land – Aboriginal rights and land claims in Labrador by Colm St. Roch Seviour and Steve Scruton Download…
Read MoreDOES IT APPLY TO YOU? On June 1, 2013, the Personal Health Information Act (PHIA) comes into force in Nova Scotia. If you are involved in health care in Nova Scotia, you need to know whether PHIA…
Read More