Dependent contractor status requires 'substantially more than 50%' of income from one client

Ontario Court of Appeal rules that lawyer who lost client that accounted for 40% of business wasn't dependent on that client
By Chris Justice
|employmentlawtoday.com|Last Updated: 08/21/2019

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, Barbara 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 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, Thurston had various other clients. However, her income from OCL represented 40 per cent of her average annual income.

The Court of Appeal determined that even the loss of 40 per cent 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 per cent” 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 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 Thurston, this was not enough to establish dependent contractor status and the statutory and common law termination rights that flow from such a determination.

For more information see:

  • Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640 (Ont. C.A.).

Chris Justice is an associate lawyer at MacDonald & Associates LLP in Toronto,an employment law firm specializing in employment law for employees and employers. He can be reached at (416) 601-2300 or cjustice@macdonaldassociates.ca.

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