SCC Says Equity Partner Not An Employee Under Human Rights Law
May 23, 2014
By Leah Kutcher, at McInnes Cooper,
Lucie LaBoissonnière, Associate at McInnes Cooper
On May 22, 2014 the Supreme Court of Canada reaffirmed the control / dependency test for “employment”, and decided that human rights legislation doesn’t protect a person with an ownership interest in the business from employment discrimination – including mandatory retirement at age 65.
McCormick was an equity partner in a law firm. The partnership agreement applied to all partners and included a clause mandating retirement at age 65. The human rights legislation protected “employees” from discrimination in “employment” relationships, including based on age. McCormick filed a human rights complaint, saying the clause did just that. The law firm, however, said the protection didn’t apply to McCormick because there was no “employment” relationship.
The SCC agreed. Its decision is based on the BC human rights laws, but human rights laws in all four Atlantic Provinces protect “employees” in an “employment” relationship from discrimination. The SCC’s decision therefore applies beyond BC:
- Liberal Approach in Context. The SCC reconfirmed that tribunals and courts should approach the definition of an “employment relationship” and an “employee” in human rights legislation in expansive, broad and liberal way – but also bearing in mind the law’s purpose of protecting vulnerable groups from discrimination.
- “Employee” Test. The SCC also reconfirmed that the “test” for who is an “employee” under human rights legislation is still control and dependency – who controls the worker’s working conditions and financial benefits and the extent to which he has an influential say in them or is subject and subordinate to someone else’s decision-making over them – regardless of the form the relationship takes.
- Never Say Never. The SCC said that in most cases, “partners” are collectively the “employer”, not employees of the partnership – but explicitly acknowledged the possibility a partner could be an “employee” protected by human rights laws in other circumstances.
The SCC’s decision that this equity partner wasn’t an “employee” under the human rights law isn’t surprising in the circumstances of this case. However, it may surprise other organizations traditionally structured as partnerships (like accountants, engineers and architects) that the SCC expressly left the door open to this possibility in other circumstances – and prompt them to review their own circumstances and the related risks.
Click here to read the SCC’s decision in McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39.
Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Human Rights Law Team to discuss this topic or any other legal issue.
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