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EMPLOYER-EMPLOYEE RELATIONSHIP - Employee status - Economic dependency

Friday, May 03, 2019 @ 1:21 PM  

Appeal from a judgment of the Quebec Court of Appeal setting aside a decision finding that Bourque was not an employee subject to the Decree respecting building service employees in the Québec region (Decree). The provision of cleaning services in public buildings located in the Québec region were covered by the Decree, which set out minimum standards in the workplace, including wages, hours of work, holidays and overtime. The dispute underlying this appeal was whether the Decree applied to the relationship between Modern Cleaning Concept Inc. (Modern) and Bourque because Bourque was an “employee” within the meaning of the Act respecting collective agreement decrees (Act). Modern provided cleaning and maintenance services through a network of approximately 450 franchises. Modern negotiated a cleaning services contract with the National Bank of Canada (Bank) in 2012 for approximately 400 of the Bank’s locations. The agreement between Modern and the Bank stated that the contract would be assigned by Modern to franchisees who would perform the actual cleaning. Modern would, however, remain responsible to the Bank for the implementation of the contracts at each location. Bourque was a franchisee of Modern. The franchise agreement stipulated that Bourque agreed to be assigned cleaning contracts and stated that he was an “independent contractor”. After the termination of Bourque’s franchise agreement, the Comité paritaire de l’entretien d’édifices publics de la région de Québec (Comité) investigated the relationship between Bourque and Modern. It concluded that the language of the franchise agreement was not determinative of the reality of the relationship between Bourque and Modern, and that despite the language in the franchise agreement, Bourque was in fact an “employee” as defined by the Act, not an independent contractor. He was therefore entitled to be paid the mandatory wages and benefits set out in the Decree. The Comité commenced proceedings against Modern in the Court of Québec. The trial judge concluded that there was a common intention that Bourque would be an independent contractor, not an employee. Accordingly, as an independent contractor, he was not entitled to the full amount claimed by the Comité on his behalf. The Court of appeal found that by failing to recognize that Modern remained contractually liable to its clients, the trial judge erred in his analysis of whether Bourque was an employee or an independent contractor. It allowed the appeal.

HELD: Appeal dismissed. The relevant question in this appeal was whether Bourque assumed the business risk and corresponding ability to make a profit that would qualify him as an independent contractor. The presence of a franchise agreement could not function to disguise the presence of a relationship between an “employee” and “professional employer” as those terms were defined in the Act. The fact that an employee had a degree of autonomy and assumed some degree of risk did not mean that he or she bore the business risk, in the sense of being able to organize his or her business venture in order to make a profit. By failing to consider the tripartite relationship, the trial judge did not consider the business as a whole, and, as a result, improperly concluded that Bourque bore the business risk. In light of Modern’s ongoing liability to the Bank, the fact that Bourque and Modern agreed to a term stating that Bourque would be an independent contractor did not materially affect the analysis, as the trial judge concluded it did. At all times, both the cleaning services contract and franchise agreement governed Modern’s business model. The effect of Modern’s business model was that it, not Bourque, assumed the “risk and profit” of the business. Because of its tripartite business model and ongoing liability to its clients, Modern placed extensive controls on Bourque to limit its own business risk. Bourque did not assume the business risk and therefore it could not be said that he was an independent contractor. The Court of Appeal correctly found that the trial judge’s failure to consider the nature of the imperfect assignments at the heart of Modern’s business model, and the resulting tripartite nature of the relationship between Modern, its clients and Bourque, was a palpable and overriding error. The mandatory provisions of the Act and Decree therefore governed the relationship between Modern and Bourque. As a result, Bourque was entitled to the wages and benefits claimed on his behalf by the Comité.

Modern Cleaning Concept Inc. v. Comité paritaire de l'entretien d'édifices publics de la région de Québec, [2019] S.C.J. No. 28, Supreme Court of Canada, R. Wagner C.J. and R.S. Abella, M.J. Moldaver, A. Karakatsanis, C. Gascon, S. Côté, R. Brown, M. Rowe and S.L. Martin JJ., May 3, 2019. Digest No. TLD-April292019015-SCC