AFM231 Chapter Notes - Chapter 20: Vicarious Liability, Independent Contractor, Labour Law
18 May 2018
School
Department
Course
Professor
Chapter 20 – The Employment Relationship
Employment Law
• Employment law in all Canadian jurisdictions, with the exception of Quebec, is rooted in the traditions of the English
common law, with an overlay of legislation.
o Both the federal and provincial governments have jurisdiction to pass employment legislation, and both levels
have been active in this area.
• The federal government has jurisdiction to make laws that affect employees of the federal government and federally
reputed industries
• The provincial government have jurisdiction to make laws that affect all other employees, including provincial
employees
• An employee is subject to either federal or provincial jurisdiction, and it is not unusual for employees working in close
proximity to be subject to different employment legislation.
• Employees may also be unionized, in which case labour relations legislations is applicable to the employment
relationship
o There are federal and provincial statutes in place
The Employment Relationship
• Employment Relationship: A contractual relationship whereby an employer provides remuneration to an employee in
exchange for work or services.
• Independent Contractors: A person who is in a working relationship that does not meet the criteria of employment.
o Usually doctors and lawyers, for example, provide services in the capacity of independent contractors, rather
than as employees of their patients/clients
Employee vs. Independent Contractor
• Historically, the courts have used a variety of tests to distinguish between the two relationships, including the following
o The degree of control exercised over the individual by the employer. The more direction and supervision
provided by the employee, the more likely that the relationship is employment.
o The ownership of tools, chance for profit, and the risk of loss from performance of the requested service.
Sharing profits and losses and the ownership of tools are indicative of an independent contractor.
o The degree of integration. The nature of the work being performed is considered in relation to the business
itself. The question is whether the work being performed is “integral” to the business, or is “adjunct” to the
normal work of business.
Implications of an Employment Relationship
• Employees have certain statutory rights and benefits, such as holidays and paid overtime, which are not conferred on
independent contractors.
• The consequences of incorrectly characterizing a work relationship as an independent contractor arrangement can
include retroactive responsibility for paying benefits as well as liability for penalties and interest charges.
• An employer is responsible for the tort of an employee committed in the ordinary course of employment, whereas an
employer is not usually responsible for torts of an independent contractor committed in the course of carrying out the
contract.
o An independent contractor, however, may be an agent for the employer, in which case the employer can be
vicariously liable for the acts of the agent under traditional agency principles
Risks in Hiring
Vicarious Liability
• An employee’s wrongful act is also within the ordinary course or scope of employment
o If authorized by the employer
o If it is an unauthorized “mode” of performing something that is authorized by the employer
• The employer will be vicariously liable if there is a significant connection between the wrongful acts of the employee
and the creation or enhancement of the risk of the wrongful act by the employer
• An employer is not responsible for wrongs that occur completely outside the employment relationship
• The justification for holding employers responsible for their employees’ actions include the following:
o Employers have the ability to control employees and therefore should be liable for the employee’s conduct.
o Employers benefit from the work of the employees and therefore should be responsible for liability incurred by
employees.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
The employment relationship: employment relationship: a contractual relationship whereby an employer provides remuneration to an employee in exchange for work or services. Independent contractor: historically, the courts have used a variety of tests to distinguish between the two relationships, including the following, the degree of control exercised over the individual by the employer. The more direction and supervision provided by the employee, the more likely that the relationship is employment: the ownership of tools, chance for profit, and the risk of loss from performance of the requested service. Sharing profits and losses and the ownership of tools are indicative of an independent contractor: the degree of integration. The nature of the work being performed is considered in relation to the business itself. The question is whether the work being performed is integral to the business, or is adjunct to the normal work of business. Vicarious liability: an employee"s wrongful act is also within the ordinary course or scope of employment.
