Taxi drivers

British Columbia, Canada Court of Appeal upholds ruling that three taxi drivers are employees

In Beach Place Ventures Ltd. vs. Employment Standards Tribunal2022 BCCA 147, the British Columbia Court of Appeal (BCCA) upheld a decision of the Employment Standards Tribunal (Tribunal) that three taxi drivers (Chauffeurs) were employees of Beach Place Ventures Ltd. (Beach Place) and Black Top Cabs Ltd. (Black Top) (collectively, the Companies). Before the BCCA, the Companies appealed the decision of the Supreme Court of British Columbia (SCBC), which also upheld the Tribunal’s decision. In making its decision, the BCCA rejected the idea that a specific legal test should be applied universally to determine whether a person is an “employee” or an independent contractor for the purposes of provincial law. Employment Standards Act (ESA). Rather, the court decided that the central question is whether the person is providing services as a “person in business on his own account” and, in making this decision, a non-exhaustive list of factors must be considered in context.

Background

In 2016 and 2017, the drivers filed complaints with the Director of Employment Standards (the Director) under s. 74 of ESA arguing that they were employees of the Companies. The Societies operate as follows:

  • Taxis are owned and operated by Black Top shareholders;
  • Black Top is the sole shareholder of Beach Place;
  • Beach Place provides administrative, accounting, and dispatching services to Black Top-owned taxis;
  • Taxi owners can hire their taxis from another taxi driver, called a “hire driver”;
  • If a taxi driver does not own a taxi or is not a leased driver, he may pay a fee to the owner of a taxi in exchange for the right to operate the taxi for a period of time, and it is called ” Alternate Driver”; and
  • Hire drivers and reserve drivers may retain their fares earned from using the taxi during the hire or license period, less any rent or license fees payable for that period.

Two complainants were reserve drivers and one was a hired driver.

One of the complainants, Mr. Abadi (Abadi), drove a Black Top taxi between 1998 and 2016. Until 2014, Abadi considered himself an independent contractor and filed his tax returns accordingly; however, in 2014 and 2015 he reported his taxable income as from employment. In 2015, Abadi applied for employment insurance benefits and the Canada Revenue Agency agreed that he had always been an employee of Beach Place. In 2016, Beach Place was assessed for unremitted CPP and Employment Insurance premiums for the reporting period of January 24, 2015 to January 1, 2016. Beach Place has appealed this decision in the Tax Court of Canada. The appeal was allowed and the judge ruled that at the time in question Abadi had his own business and was not an employee of Black Top or Beach Place (tax ruling).

In March 2018, the director issued his decision regarding Drivers’ ESA Complaint (Determination). It provided that the Drivers were employees of the Companies under the ESA and the Companies owed the Drivers money for unpaid wages. The companies appealed the determination to the Tribunal and submitted the tax ruling. The Tribunal varied the decision in two respects, but otherwise dismissed the appeal and affirmed it (appeal decision). The companies then asked the Court to reconsider the appeal decision, but their request was rejected (reconsideration decision). The companies then applied to the SCBC for a judicial review of the appeal decision and reconsideration decision, but that request was also denied. The judge indicated that the judicial review should be on the reconsideration decision, but said it was not patently unreasonable, which is the applicable standard of review.

BCCA decision

The BCCA agreed with the BCSC and dismissed the Companies’ appeal, upholding the Tribunal’s decision that the Drivers were employees.

On appeal, the Companies argued that by not complying with the tax ruling, the reconsideration ruling was patently unreasonable. The BCCA found no basis for this argument and dismissed this ground of appeal.

The Companies also argued that the reconsideration decision was patently unreasonable because, among other things, the reconsideration panel applied an erroneous interpretation of the term “employee” in the ESA. In making this argument, the Companies argued that “the application of the ESA requires… a clear and coherent conception of employee/employer relations”, which had not been applied. However, the BCCA disagreed that such a test was necessary. The tribunal struggled to understand the Companies’ insistence on the need for a general conception of who an employee is and noted that this “presupposes a monolithic ‘conception’ of employment within which there is a consistent significant difference between the common law, other statutory regimes and the ESA.”

The BCCA said that throughout the proceedings, the decision makers relied on a framework that was context and fact specific to decide whether the drivers were employees for the purposes of the ESA, and that the reconsideration decision expressly addressed the companies’ argument when it stated that the existence of an employment relationship is best determined by considering all of the relevant factors, rather than by applying a single, specific legal test. The BCCA mentioned 671122 Ontario Ltd. vs. Sagaz Industries Canada Inc.2001 SCC 59 (Sagaz), in which the Supreme Court of Canada held that the central question is whether the person is providing services as a “person in business on his own account” and provided a non-exhaustive list of facts to consider, including whether the worker provides his own equipment, whether the worker engages his own helpers, the degree of financial risk taken by the worker, the degree of investment and management responsibility held by the worker, and the worker’s opportunity for profit in the performance of its tasks. The BCCA noted that the factors identified in Sagaz were considered by the Reconsideration Panel, which understood that its role was to analyze the drivers’ complainants “in a contextualized manner and “not by articulating and applying a precise legal test or definition”. The BCCA concluded :

What constitutes an employee within the meaning of the ESA is necessarily governed by the statutory definitions of the ESA, the ESA itself and the relevant case law. Beyond this, however, further insisting on the need for conceptual rigor runs counter to the acknowledgment in Sagaz that “there is no conclusive criterion which can be universally applied to determine whether a person is an employee or an independent contractor” (at para. 46) and that the “relative weight of each [factor] will depend on the particular facts and circumstances of the case” (at para. 48).

In my view, the Reconsideration Panel’s refusal to formalize a “design” of “employee” for ESA purposes was not patently unreasonable.

The BCCA considered and rejected additional arguments raised by the Companies regarding interpretive issues, including the Companies’ argument that “the reconsideration decision did not sufficiently consider various interpretative presumptions that assume consistency between words used in legislation and words used in common law. In rejecting this argument, the court noted that the ESA is “benefit-conferring” “program legislation”, which generally takes the form of a stand-alone law that “addresses social or economic problems by establishing programs for the regulation or distribution of benefits and by creating departments or other agencies to administer them”. This contrasts with “reform legislation”, which alters “‘private’ law – the law of property, the law governing the relations of subjects to one another”. The court cited a leading academic text on the interpretation of statutes,1 which provides that the nature of the legislation – program versus reform – will affect its interpretation. While reform legislation “is rooted in the common law and is still closely associated with common law principles and values”, when program legislation is interpreted, the legislature takes precedence; “recourse may be had to the common law, but only to the extent necessary to achieve the purpose of the legislature and the proper operation of its scheme. The BCCA concluded:

Certainly, the common law provides an interpretive context for the ESA. But the appellant’s emphasis on the primacy of the common law or on the need to interpret the ESA in a way that reflects the common law ignores these various principles and distinctions.

In response to the Companies’ argument that the word “employee” was “obviously intended to be understood having regard to common law jurisprudence”, the BCCA stated that it was clear that in the determination, the appeal decision and the reconsideration decision, the question of whether the complainants were “employees” was firmly linked to Sagaz and guidance provided by other court decisions.

The Societies also objected to the statement in the Determination that the ESA is intended to protect “as many people as possible”, arguing that it reflected an interpretation of the ESA that was “unacceptably broad” and that “the the Tribunal’s failure to expressly reject or approve the delegate’s assertion was “a failure to engage in a proper process of statutory interpretation”. The BCCA, however, stated that the reconsideration decision directly addresses this interpretation of ESA when he said:

  • None of the Supreme Court of Canada decisions relied on by the Companies “authorizes a decision maker under the ESA begin their analysis with the presumption that an individual is an “employee” for the purposes of the ESA”; and
  • Whether a person is an employee within the meaning of the ESA “must be determined in context and based on, among other things, the many context-specific factors identified in Sagaz and other decisions.

Conclusion for employers

The BCCA’s decision in beach plaza confirms that while the common law provides interpretative context to employment standards legislation, there is no single conclusive legal test for determining whether a person is an employee for the purposes of such legislation. beach plaza emphasizes that the existence of an employment relationship is best determined by considering all relevant contextual factors, including, but not limited to, whether the worker provides their own equipment, whether the worker engages their own helpers, the degree of financial risk taken by the worker, the degree of investment and managerial responsibility held by the worker, and the possibility of profit for the worker in the performance of his or her duties.