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                   professional development
 Another factor considered by the court in determining the nature of the working relationship is the risk of profit or loss. In other words, is it within the person’s power
to make more (or less) income based on how much they work or produce?
In a statement of claim, the advisors’ case is described as follows: the plaintiffs, Jamie Vermeeren and Ermos Erotocritou, were hired by Investors Group as consultants in 2000. They were promoted to branch managers in 2003 and 2004, respectively, and then to regional direc- tors — Vermeeren for the Fraser Valley region in 2006, and Erotocritou for midtown Toronto in 2010. They allege that their contracts were terminated abruptly after they raised concerns about changes to their work relationship with Investors Group and their compensation.
The plaintiffs’ employment contracts were terminated without notice — or payment in lieu of notice — as their contract with Investors Group, which they signed as consultants in 2000, designated them as independent contractors. The plaintiffs argue that designation is a mischaracterization in law and that they’re entitled to the termination benefits offered to employees.
“People are understanding what their entitlements are and they’re challenging more than they ever did before”
“By using this mischaracterization of the employee versus contractor, we’re trying to challenge the structure on which Investors Group premises its business oper- ations,” says Shapiro.
In an emailed statement, Investors Group said: “We disagree with the position put forward by the plaintiffs and will be vigorously defending the action.”
The issue of how advisor employment is classified is not unique to IG, and this isn’t the first time an advisor’s work- ing relationship to a financial institution has been tested in court. In 2016, Toronto-based BMO Nesbitt Burns reached a $12.5-million settlement, including costs, in an overtime class action. Another case regarding a former insurance advisor with Quebec City–based Industrial Alliance Insur- ance and Financial Services went to the Supreme Court of Canada in 2018 (see “Related cases” on p. 23).
In some ways, the court cases are quite distinct. The BMO class action was litigated based on the Ontario Employment Standards Act and is focused on overtime; the suit against IG is based in common law and focused on wrongful dismissal.
But both cases raise the potential mischaracterization or misclassification of the advisor role.
Joel Smith, a lawyer with Markham, Ont.-based Williams HR Law, says awareness of legal entitlements related to employment is growing.
“It’s just so easy with all of these resources online such as legal blogs,” says Smith. “People are understand- ing what their entitlements are and they’re challenging more than they ever did before.”
Financial firms should think carefully about the kind of working relationship they want to have, and analyze the costs associated with employees versus contractors. Firms also need to ensure the contract signed by an individual prop- erly reflects — and continues to reflect — the designated relationship, and that the Ministry of Labour and the courts would recognize that relationship as defined in the contract.
“Firms are taking big chances if they choose to not comply and ... be creative in the way they set up their relationships,” says Shapiro.
As stated above, the employment classification typ- ically hinges around control: Who has control over the advisor’s business, and when and how they work?
“There’s a real tension, especially with financial ser- vices, with the issue of having control,” says Andrea Sanche, a partner with Toronto-based Ricketts Harris. “Because there’s so much regulation, companies have to have so many policies in place.”
According to Ontario employment law, there are gen- erally three categories of worker relationships: independ- ent contractor, dependent contractor and employee. Each category has its own set of benefits and entitlements.
Independent contractors have complete control over when and how they work, but they don’t have any entitle- ments. On the other end of the spectrum are employees, who have no control over when and how they work but who receive entitlements such as health benefits and notice of termination. In the middle are dependent con- tractors, who don’t receive the full range of benefits as employees but are entitled to notice of termination.
“It’s a spectrum and just a matter of where you fit,” says Smith.
FALL 2020

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