COLUMN: Is your business partner a partner, or employee?

It is commonly known that employers do not have carte blanche to impose whatever terms they wish into contracts...

It is commonly known that employers do not have carte blanche to impose whatever terms they wish into contracts of employment with their employees. Rather, given an employee’s relative vulnerability, British Columbia provides protective legislation that restricts the employer from placing certain terms into employment contracts – even if the employee agrees. In particular, the Employment Standards Act sets “floors” for working conditions, and the Human Rights Code prohibits discriminatory practices in the employment setting.

An interesting remaining question is: are business owners free to insert any provisions they wish into the contract they make with their partners or co-owners, or are they subject to restrictions similar to those applicable to their employees? Although it occurred in the context of the unique ownership structure present in the NBA, the issue involving Donald Sterling (owner of the L.A. Clippers) and the clause in the NBA ownership agreement that allowed for fellow owners to force the sale of his team, has certainly brought the legality of contractual agreements amongst co-owners to the forefront of many minds.

A recent decision of the Supreme Court of Canada, McCormic v. Faskens, visits this issue in a more familiar context. The case serves as a useful reminder to business owners that contractual relationships between themselves and their co-owners may well be subject to various legislative restrictions.

In Faskens, Mr. McCormic co-owned a law firm as an equity partner. The Partnership Agreement between McCormic and his partners included a clause requiring equity partners to retire at age 65. McCormic argued this clause was unenforceable because it violated section 13 of the Human Rights Code prohibiting age discrimination in employment. The law firm responded by arguing that because section 13 only applies to employees, it did not apply to McCormic.

Ultimately, the Supreme Court held that McCormic was not an employee, as his relationship with the law firm could not be characterized as one of employment, and the Supreme Court was forced to find in favour of the law firm.

Although McCormic was found not to be an employee in this situation, the court noted that this will not always be the case for co-owners. To determine whether an individual will be deemed to be an employee – and thus have the protection of the Human Rights Code – the test to be applied requires a consideration of how much control the employer has over the individual’s working conditions, and how dependent the individual is on the employer.

Doug is a partner with RDM Lawyers LLP.  Doug practices in the areas of labour and employment law, human rights, and personal injury law.  Questions or comments about this article can be sent to legalease@abbynews.com.

Just Posted

Dancers from the Sts’ailes First Nation perform the eagle dance at a welcome banner dedication ceremony on Thursday, June 10. “Ey Swayel” is a Halq̓eméylem term translated as ‘a good day.’ (Adam Louis/Observer)
VIDEO: ‘A good day’ for Agassiz school as Sts’ailes welcome banner is dedicated

Banner hangs above the school’s entrance, welcoming students, staff and visitors

Missing Abbotsford man Adam Hobbs was found deceased on Thursday evening (June 17).
Body of missing Abbotsford man Adam Hobbs found

Hobbs was reported missing Monday after leaving his job site in Langley

UFV athletes were honoured for their strength and perseverance during the pandemic. (UFV photo)
Fraser Valley athletes recognized in year without sports

UFV Cascades athletes honoured for strength shown during the pandemic

Abbotsford council has given permission for Chilliwack to use the JAMES wastewater treatment plant for the disposal of trucked liquid waste until the end of September.
Chilliwack gets exemption to Abbotsford bylaw prohibiting liquid waste from other cities

Process in place until September while new facility under construction in Chilliwack

There were a total of 182 deaths of trumpeter swans at Judson Lake over the past winter, according to the Save the Swans website. The lake has the heaviest lead concentration of any known lake, the website states. (PHOTO: savetheswans.ca)
Abbotsford man starts petition, saying lead shot is killing waterfowl in Judson Lake and beyond

Farmer Kevin Sinclair says local lake is ‘poster child’ for swans’ deaths from lead poisoning

A small pod of Pacific white-sided dolphins pass by close to shore in Campbell River June 16, 2021. Still capture from video courtesy of Kimberly Hart
VIDEO: Dolphin sunset captured from Vancouver Island shore

Spectacular setting for view of travelling pod of Pacific white-sided dolphins

Police are asking for public assistance in locating Anthony Graham who has been charged with the murders of Kamloops brothers Carlo and Erick Fryer. (RCMP photo)
2 charged, suspect at large in killings of B.C. brothers linked to gang activity: RCMP

Kamloops brothers Erick and Carlo Fryer were found deceased in May on a remote Okanagan road

Albert Health Minister Tyler Shandro and Alberta Premier Jason Kenney unveil an opening sign after speaking about the Open for Summer Plan and next steps in the COVID-19 vaccine rollout, in Edmonton, Friday, June 18, 2021. THE CANADIAN PRESS/Jason Franson
Alberta 1st province in Canada to lift all COVID-19 public health restrictions

70.2% of eligible citizens 12 and older in the province have received a dose of the vaccine

Fraser Health registered nurse Ramn Manan draws a dose of the Pfizer COVID-19 vaccine into a syringe at a walk-up vaccination clinic at Bear Creek Park, in Surrey, B.C., on Monday, May 17, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Honour our fathers’ with COVID-19 vaccine protection, B.C. urges

109 new cases Friday, 75 per cent of 12 and up immunized

(Paul Henderson/ Chilliwack Progress)
Trutch Avenue in Chilliwack to be renamed to remove racist taint

New name to have Indigenous significance as Chilliwack takes new step toward reconciliation

Canadian Prime Minister Justin Trudeau is seen during a joint news conference following the EU-Canada Summit, in Brussels, Belgium, Tuesday June 15, 2021. Trudeau says Canada is on track now to have 68 million doses delivered by the end of July, which is more than enough to fully vaccinate all 33.2 million Canadians over the age of 12. THE CANADIAN PRESS/Adrian Wyld
Vaccine deliveries enough to fully vaccinate all eligible Canadians by end of July

Three in four eligible Canadians now have their first dose, nearly one in five fully vaccinated.

A search is underway for a 75-year-old fisherman who went missing near Port Angeles Thursday evening. (Courtesy of U.S. Coast Guard)
Search continues for angler missing between Port Angeles and Victoria

Canadian, U.S. Coast Guard searching for 75-year-old man reported missing Thursday evening

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Most Read