By:  Hermione Shou

The Supreme Court of Canada decided on the definition of an “employee” in the McCormick v. Fasken Martineau DuMoulin LLP case on May 22, 2014.  This case sets a precedent for management in many professional firms, especially partnerships, as it identifies what factors distinguish employees from partners.  It also sets out what establishes an employment relationship, making it helpful when distinguishing between employees and other types of workers.

In the case at hand, John McCormick worked at the law firm Fasken Martineau DuMoulin LLP as an equity partner.  All equity partners must retire by the last day of the year of their 65^th birthday, as stated in the company’s partnership agreement, with the rare exception outside of the rule that equity partners can switch over to being an employee or non-equity partner.  When McCormick was 64, in 2009, he filed a complaint against the company at the Human Rights Tribunal.  He alleged that the firm’s provision discriminated him on the basis of age in the context of employment—an action contrary to s. 13(1) of the Human Rights Code, R.S.B.C. 1996, c. 210 (“Code”).

The firm then asked for the case to be dismissed at the Human Rights Tribunal with the grounds that the Code only protects employees and that because McCormick was an equity partner, the Code has no power over this type of relationship.  The Tribunal decided that the Code does have power over this issue, ruling that an employment relationship does exist between McCormick and the firm.  In response, the firm applied for judicial review, but the British Columbia Supreme Court dismissed their application.  On appeal at the Court of Appeal, it was ruled that an employment relationship, for which the Code can apply to, does not exist and that the Tribunal does not have jurisdiction over this matter.  McCormick then appealed to the Supreme Court of Canada, but the appeal was dismissed.

In determining whether or not an employment relationship exists, the Supreme Court of Canada looked at two aspects of the relationship:  control that the employer had of work conditions and remuneration, and the dependency that the worker had on the employer.  McCormick was neither controlled by the firm as an employee nor was he dependent on the firm, as an equity partner, so he does not match this definition of an employee.  It was also established in the case that partners in a partnership are actually the ones who have control of the work conditions and remuneration, and are in fact the employer.  McCormick falls into the definition of an employer as he was an owner with equity stake in the firm who was involved with its management and profit-and-loss sharing.  Furthermore, the case illustrates how the relationship between the firm and the equity partner needs to be evaluated on a case-by-case basis to determine whether or not an employment relationship exists.  Thanks to this important decision, relationships in the employment context in Canadian professional partnerships are much clearer.

 

Sources:

McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39 (CanLII).

Valerie Dixon, “Supreme Court of Canada Rules on the Definition of “Employee” in Human Rights Legislation” Canadian Labour & Employment Law Blog, online:  Miller Thomson LLP <http://www.millerthomson.com/en/blog/canadian-labour-employment-law-blog/supreme-court-of-canada-rules-on-the>.