A recent decision of the Ontario Court of Appeal provided some guidance on how economically dependent a contractor must be before they are afforded the same statutory and common law termination protections given to employees.
In Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640, Ms. Thurston was a lawyer who provided services to the Office of the Children’s Lawyer (OCL) under a series of fixed-term contracts over a 13-year period. The OCL did not renew the last contract.
Each contract required Ms. Thurston to apply for reappointment as one contract expired, there was no automatic right of renewal, and had language to the effect of what is reproduced below:
The term may be extended or subsequently renewed in the discretion of the Children’s Lawyer.
No guarantee of work
The OCL makes no guarantee of the total value or volume of work to be assigned to you. You confirm that in your capacity as an OCL agent, you are not an employee of the OCL.
Termination of Agreement
In order to effect an orderly transition, you agree to give the OCL sixty days written notice of your intention to resign from the OCL panel…
The Children’s Lawyer, or her designate, reserves the right, at her sole discretion, to terminate this retainer agreement at any time, without fault and without liability.
Apart from servicing the OCL, Ms. Thurston had various other clients. However, her income from OCL represented 40% of her average annual income.
The Court of Appeal determined that even the loss of 40% of someone’s business was not enough to establish dependent contractor status. The Court went on to state that “near-exclusivity” status of a contractor requires “substantially more than 50%” of one’s business.
Furthermore, even if there is evidence of economic dependency rising to the levels of “near-exclusivity”, whether or not the dependency was self-induced is a relevant factor and something advanced by the OCL. However, given that Ms. Thurston’s billings did not rise to the status of “near-exclusivity”, from the Court’s perspective, the self-inducement issue will have to be left for another day.
Ultimately, and despite the significant impact that the loss of the OCL as a client had on Ms. Thurston, this was not enough to establish dependent contractor status and the statutory and common law termination rights that flow from such a determination.