Why the Purported Subcontractors are Employees and not Independent Contractors
In addition to the foregoing, SEIU Local 2 submits that the subcontractors engaged by Impact are not true “independent contractors”, but rather, are employees of Impact itself. In determining whether a person is an employee or an independent contractor, the basic question is “whether the person who has been engaged to perform the services is performing them as a person in business on his own account.” (according to the Supreme Court of Canada in Sagaz [2001] 2 SCR 983). In making that determination, a number of factors are considered, including the level of control exercised by the employer, whether the worker provides his or her own equipment, and the degree of financial risk taken by the worker, including the risk of loss.
Based on its research, SEIU Local 2 asserts that there are a number of factors that demonstrate that the vast majority of purported subcontractors are, indeed, employees:
- Impact provides the equipment for both hourly employees and the purported subcontractors.
- Impact or the property owner provides the cleaning supplies, not the purported subcontractor.
- Impact provides uniforms and, indeed, even the purported subcontractors typically wear Impact uniforms.
- Impact provides training to both hourly employees and the purported subcontractors.
- For the vast majority of the purported subcontractors, it is clear that they do not demonstrate entrepreneurial activity. For example, the vast majority of such contractors work solely for Impact and do not advertise.
- The vast majority of purported subcontractors also perform the work without hiring others to assist.
- For the vast majority of purported subcontractors, there is essentially no degree of financial risk, as the investment in their business is typically minimal and often only involves the payment of business registration or related fees. There is, therefore, essentially no risk of loss or chance of profit, particularly given that the purported subcontractor does not own any equipment or cleaning supplies.
- The work performed by the purported subcontractors is supervised by Impact – whether by an on-site supervisor or by one of Impact account managers.
- Impact also determines the parameters for the performance of work by the purported subcontractors, including the determination of when the work is to be performed.
- The purported subcontractors perform the exact functions and type of work as is performed by Impact’s hourly employees. Indeed, it can often be the case that the purported subcontractor works directly alongside hourly employees at the same work location. The purported subcontractor is, therefore, working in the core area of Impact’s business.
In light of the foregoing, SEIU Local 2 believes that an independent investigation conducted by the Ministry would confirm our belief that the vast majority, if not all, of the persons working within Impact’s subcontracting scheme are, in fact, employees and not independent contractors. In our view, and having regard to the considerations set out immediately above, it is clear that Impact exercises control over the purported subcontractors, both in terms of setting the parameters of the work as well as the supervision of that work. In addition, it is also clear that the vast majority of these purported subcontractors do not exhibit signs of entrepreneurial activity, as would typically be expected from a person operating a business. Further, it is evident that there is essentially no financial risk or chance of loss, particularly given the fact that the purported subcontractors do not own their own equipment or cleaning supplies.
SEIU Local 2 believes that there certainly is a legal basis for a finding that the vast majority, if not all, of the purported subcontractors are, in fact, employees of Impact. Although SEIU Local 2 believes that Impact intended to structure its operations in order to avoid the various statutory deductions and obligations associated with an employment relationship, it is nonetheless the case that the effect of that structuring of operations has resulted in these workers being deprived of their rights under the ESA.