March 1, 2019

By: Chris Justice

Not long ago, it was the norm for individuals to work for a single employer across their entire career, enjoying all the benefits associated with long-term employment status. Times are changing rapidly, however, with temporary, fixed-term, and freelance working relationships becoming the new norm, especially for younger generations. Some have labelled these developments as a transition towards the “Uber” or “gig” economy.

In 1999, Boomers made up over half (51.4%) of the workforce. By comparison, Gen-X made up 41.3% and Millennials made up 7.2%. Contrast that with statistics for 2014: Boomers made up 31.1%, with Gen-X making up 33.9% and Millennials making up 36.8%. [1]

In 2017, there were 2.1 million temporary employees. In that year, the number of employees with a temporary job grew at a much faster pace than those with a permanent job (5.3% compared with 1.4%). This difference in growth has been the case since 1997. Temporary employment also accounted for nearly 20% of employment gains from 2016 to 2018. [2] In 2017, 32% of 15 to 24-year olds held temporary employment in contrast to 10% of 24 to 55-year olds and 11% of workers 55 years and older. [3]

A large part of the trend regarding temporary workers has to do with how younger generations view work. They find contract work appealing, as it provides “freedom” and “flexibility”, and with technology, “the idea of going to one employer for 30 years is long gone”. [4]

In 2017, approximately 15% of workers were self-employed in Canada. This includes workers that were both incorporated and unincorporated, as well as those with paid help. Under common law, any of these individuals may be deemed dependent contractors.

According to Randstad Canada, if you add up all of the contingent workers, freelancers, “independent contractors” and consultants, between 20% and 30% of the Canadian workforce are “non-traditional workers”. That percentage is going up, with 85% of the companies surveyed figuring that they will increasingly move to an “agile workforce” over the next few years. [5]

It has been estimated that freelancers, “independent contractors” and on-demand workers will make up 45% of the Canadian workforce by 2020. [6] However, due to various other forms of non-traditional employees that exist today, in addition to those that are yet to come, this statistic only represents the tip of the iceberg.

Important to note is the fact that these numbers would still not account for all individuals who would be deemed dependent contractors under common law, only further illustrating the significant impact this class of workers will have.

While the courts in Ontario have recognized this category of workers to some degree in the unionized employment law context, it was not until 2009 that the Ontario Court of Appeal, in the decision of McKee v. Reid’s Heritage Homes Ltd. formally established the dependent contractor category in the non-unionized employment law context. [7]

What does this mean in the context of a dependent contractor’s legal rights? What protections are they afforded?  Do they differ from the legal rights afforded to more traditional employees? What should employers be aware of and do, to best minimize potential liability in regard to this emerging class?

Stay tuned for Part 2 as we delve into the legal history of this emerging category, the current legal landscape as it relates to dependent contractors, and what both employers and employees need to know in terms of their rights and obligations!