In the Matter of an Appeal Under the Canada Labour Code
Greyhound Canada Transportation corp. (”Greyhound” or the “Employer”), Appellant Brent Lefler (”Lefler”) and Ralph Kummer (”Kummer”), Respondents
Petersen Referee
Heard: June 29-30, 1998
Heard: October 7-8, 1998
Judgment: March 16, 1999
[1999] C.L.A.D. No. 155
Counsel: Mr. Michael Ford, for Greyhound
Mr. Bill Johnson, for Lefler, Kummer
Subject: Employment; Public
I.S. Petersen Referee:
- Introduction
1 This is an appeal of a decision and payment order made by Labour Canada in response to complaints under Part III (Standard Hours, Wages, Vacations and Holidays) of the Canada Labour Code (the “Code”) by Lefler and Kummer, two owner-operators with Greyhound in the Vancouver area. They complained that Greyhound made unauthorized deductions from their earnings on account of cash shortages.
2 Labour Canada reviewed the relationship between the owner-operators and Greyhound determined that Lefler and Kummer were employees for the purposes of the Code and not independent contractors. A letter from Labour Canada, dated May 26, 1997, provides the basis for the decision:
1) control over the workers and their work – The hours of work are set by the company; the deliveries are set out by the company; the company obtains the greater majority of the sales to be delivered; the workers use company correspondence. The union dues … are deducted from the workers’ cheques.
2) ownership of tools – The Company owns the radio dispatch system and licence, and the building where the work is dispatched; and the truck (which is owned by the worker) is required to display on a company approved white background, the decal and signage package provided by the company; the drivers pay for half of the uniform that they are required to wear on the job (company pays the other half).
3) chance of profit – Pay is calculate on a percentage pickup charge (70%); same day delivery must occur; the number of deliveries are about the same each day with minimum income set at $2,800.00 per month.
4) risk of loss – Drivers are responsible for unpaid waybills; for any forgotten pickups or requests for late pickup, the driver must cover the cost of courier ($15); cash shortages are deducted; if a driver is sick and the company has to get a replacement driver, the original driver is charged all the billings for the day.
3 Labour Canada determined that the deductions were “unauthorized deductions from wages under the Code” and issued a payment order for $139.29, less permitted deductions.
4 Greyhound appeals the decision and payment order.
- Issues
5 It is not in dispute between the parties that Greyhound is federally regulated and subject to the Code. The issues raised by this appeal are, in a nutshell:
1) whether Lefler and Kummer are employees or independent contractors for the purposes of Part III of the Code; and
2) if they are, whether the deductions are permitted under the Code.
6 The amount in the payment order is relatively small, and it is clear that the “real” issue between the parties is whether Lefler and Kummer, and other owner-operators, are employees under Part III of the Code. If Lefler and Kummer, and other owner-operators, are held to be employees, they may be covered by other provisions of Part III.
- Background and Facts
7 A hearing was held on June 29, 30, October 7 and 8, 1998.
8 At the hearing, Greyhound called a number of persons to testify on its behalf. Greyhound’s principal witness was Mr. David Leach (”Leach”), the general manager for the British Columbia region. He had served with Greyhound in a number of capacities since 1984 in Alberta and British Columbia, interrupted by a period of almost two years with a Saskatchewan crown corporation from June 1994. In March 1996, he became assistant general manager and in January 1998 general manager. Greyhound also called two owner-operators to give evidence. Henry Ho (”Ho”), whose territory was in South Vancouver, had been an owner-operator for eight years, since 1990. Jaggit “Jug” Grewal (”Grewal”), whose territory was Annacis Island, had been an owner-operator since 1992.
9 Lefler and Kummer did not call any witnesses.
Greyhound – Background
10 Greyhound has been in the transportation business since 1929. It is mainly in the ground transportation and operates Greyhound routes, and is connected with other carriers, from Ontario to British Columbia. The focus of Greyhound’s business is three product lines: passenger transportation, charter and courier services. Greyhound operates Canada’s largest intercity bus company, linking more than 1,100 towns and cities, as well as a charter service and Greyhound Courier Express (”GCX”), a courier and package delivery service throughout Canada.
11 With respect to GCX, Greyhound is focussed “on becoming the carrier of choice for station-to-station shipments of goods within <its> network”. GCX holds approximately 2.2 per cent of the $2.6 billion courier market in Canada. Station-to-station is the most basic of courier services, representing almost 85 per cent of GCX revenue. Leach testified that GCX revenues in 1997 were approximately $62 million. British Columbia accounted for $24-26 million. “Door-to-door” service is not, according to Greyhound, the mainstay of the company’s business, accounting for only $4 million of GCX revenues. In 1997, the revenue for P&D, or Pick-up and Delivery, in Vancouver area was $2 million. In cross examination, Leach agreed that the percentage of billings from the P&D service assisted the station-to-station component of the business and that — overall — P&D contributed 20 per cent, though in major centres, such as Vancouver, 30-40 per cent. Greyhound notes that while “our competitors fight for dominance in this market, GCX will continue to use door-to-door as a stand-alone product within key regional lanes and as a value-added, flexible add-on for our core station-to-station bus product”.
12 Historically, Greyhound package delivery service was limited to station-to-station. In response to competitive pressure from rivals in the courier business, Greyhound expanded to business deliveries. Since 1989, Greyhound has offered P&D services in the Vancouver area through the use of owner-operators. Greyhound acquired A-1 Bus Line Pick-Up Ltd. (”A-1”), a wholly-owned subsidiary, which holds the Motor Carrier Commission licence under which the business is operating, in the late 1980s. The licensing requirement may have been a significant reason for Greyhound to purchase A-1. In 1997-98, the courier business was de-regulated and while, before 1997, licences were required for specific areas, under the new regulatory scheme, Greyhound is licenced for all of British Columbia. Moreover, now anyone, including, for example, Lefler and Kummer, can apply for a licence to operate a route. Owner-operators are no longer required to use A-1’s licence.
13 In the Vancouver area, Greyhound operates both a “station-to-station” and a “door-to-door” parcel delivery service. Greyhound operates the courier services through its own terminals, such as the downtown Vancouver terminal, staffed by Greyhound employee, and commissioned agents. Greyhound has some 11 agents in the Fraser Valley, including Langley, Surrey and Abbotsford. The agents, who are independent business operators, have their own employees. There are a total of 40 owner-operators. Of those, 29 are “downtown” (Vancouver), 6 are is Surrey, and 5 in Langley. Lefler is in Surrey, and Kummer operates in Vancouver and Surrey. Generally, the owner-operators pick up parcels from customers, bring them to a terminal/agent in Langley, Surrey and Vancouver. Parcels brought to the Langley or Surrey locations, for example, are put on a shuttle, operated by the agent in Surrey, and transported to Vancouver where they are sorted into bins and picked up for delivery by owner-operators or sent on by Greyhound coach or line haul trucks to other destinations.
14 Pacific Central terminal in downtown Vancouver has a number of facilities: a passenger waiting area, a ticket office, a restaurant, coach line and charter operations. It also has facilities for the GCX operation. The latter is in a separate building from the bus and charter operations, in a “closed off facility” with a store-front for deliveries, a “sort centre” for packages and a dispatch. The owner-operators do not have lockers, offices, desks or telephones at Greyhound. However, the do have access to a lunchroom or drivers room where they may prepare waybills. As well, owner-operators have “pigeon holes” from where they collect their waybills.
15 Dispatch, accounting, collection, payments, marketing and sales are provided by Greyhound employees. As well, the busses and line haul truck which transport the parcels from station-to-station are operated by Greyhound employees. The “sort centre” has a loading dock, staffed by Greyhound employees, who sort and move packages within the warehouse. The owner-operators are not involved in sorting parcels. They load vans, while express agents and platform loaders, Greyhound employees, places the parcels in the appropriate bin for each route. When the van is loaded, the owner-operators leave. They sort the parcels by destination in their territory according to their own system. Parcels delivered by the owner-operators are sorted by Greyhound. In cross examination, Leach agreed that the entire process is under Greyhound’s supervision.
Union Certification and Collective Agreement
16 In August 1989, the Amalgamated transit Union, Local 1374 (the “Union”), which has a certification with Greyhound, applied to the Canada Labour Relations Board to have the owner-operators declared to be dependent contractors. The Canada Labour Relations Board amended the certification to include the owner-operators as dependent contractors. With certain exceptions, the bargaining unit is an “all employee unit”.
17 In June 1991, the Union and Greyhound negotiated the first collective agreement for P&D owner-operators. On December 17, 1993, a new collective agreement for 1994-96 was concluded and section O/O-10 was added to the sections dealing with owner-operators. In 1997, a new collective agreement was concluded for 1996-98. There were no changes to the provisions dealing with owner-operators. The parties point to a number of provisions of the collective, including the following, dealing with owner-operators:
Article 6 Owner-Operators
The following are the only provisions of the collective agreement which apply to owner/operators. No other provisions of this collective agreement will apply to owner/operators.
Section o/o-1
1.(a) The Company recognizes the Union as the fully designated and sole collective bargaining representative of all Owner/Operators of Greyhound … and agrees to meet and treat with the duly accredited officers and committees of the Union on all questions relating to contracts for service arising under the terms of this Agreement and agrees to deal with it as hereinafter provided.
(b) It is hereby agreed that each of the Owner/Operators shall faithfully, honestly and loyally serve the Company to the best of his ability, and exercise his best efforts in the promotion of the Company’s interest.
Section o/o-3 Management Rights
It is not the intent of this Contract to include matters of management herein, and the Company reserves to itself the management, conduct and control of the operation of its business ….
Section o/o-7 Grievances
The only differences that may be grieved and/or arbitrated under the terms of Article 6 applying to Owner/Operators by the Union or the Owner/Operators by the Union or the Owner/Operators will be the provisions of Article 6 and termination of services referred to in Section 18.0 in the contracts for individual services of each Owner/Operator. …
Section o/o-8
Each Owner/Operator will enter into a contract for services with the Company in the form provided by the Company which will state the terms and conditions under which the Owner/Operator be engaged. …
18 The collective agreement also provides for check-off, union security, certain definitions, group life insurance and group RRSP for owner-operators.
Owner-Operators
19 Leach explained that Greyhound distinguishes between different categories of employees, from regular full-time to casual, and independent contractors. The latter group cannot transfer their seniority should they become employees within the bargaining unit. Independent contractors are described by Greyhound’s human resources department as follows:
An independent contractor is not an employee of the company, there are no employee benefits provided by Greyhound and Greyhound is not responsible for UIC, CPP or tax deductions. The independent contractor must have their own Revenue Canada taxation number and a specific contract must be entered into which details pre-determined, identifiable and completable (sic) tasks. An independent contractor sets their (sic) own hours, provides their own tools and contracts to complete a projet or job by a specified time for a set price. The contractor invoices Greyhound for the services rendered and is paid by the accounts payable department. An independent contractor does not enter into an employer/employee relationship with the company.
20 In some instances, memoranda from various company employees, nevertheless, referred to — or addressed — owner-operators as “employees”.
21 Each of the owner-operators, including Lefler and Kummer, has entered into a contract with Greyhound, which is referenced in the collective agreement. This contract, which has been used since 1993, provides, and the parties pointed to, inter alia a number of provisions:
WHEREAS:
- Greyhound operates a package express pickup and delivery service from bus and express terminals located in the City of __________ (the “Terminals”);
- Greyhound from time to time engages Dependents Contractors who own or lease and operate their own motor vehicles to provide pickup and delivery service to Greyhound customers and accounts;
- The Contractor desires to be engaged as a Dependent Contractor to service Greyhound customers and accounts;
1.0 Relationship of the Parties
1.1 The parties intend that the contractor will be an Owner/operator .. and nothing herein shall be construed to be inconsistent with this relationship.
1.2 For the first seventy five (75) days of service from the date of this Contract, the Contractor will be on probation. During the probation period Greyhound may terminate the services of the Contractor and this Contract without recourse of Paragraph 19.0, or the grievance procedure under Article 6 of the Collective Agreement.
NOTE: This applies to new hires and those who have not yet completed the probationary period.
3.0 Area of Work
3.1 Greyhound agrees to assign a territory to the Contractor wherein the Contractor will provide Pickup and delivery services … but the Contractors rights to the assigned territory are not exclusive.
Greyhound reserves the right to alter the Contractor’s assigned territory, designate a different territory for the Contractor if, in Greyhound’s opinion changes in the assigned territory are necessary to properly and effectively service and expand Greyhound customers and accounts. The Contractor acknowledges that a floater driver will, from time to time be used by Greyhound to pickup and deliver shipments within the territory.
4.0 Control of Work
4.1 Greyhound is interested in the results, including customer satisfaction, obtained by the Contractor under this Contract. The manner and means of providing the services are subject to guidelines and procedures which are necessary to properly service Greyhound customers and accounts, and are the responsibility of the Contractor.
5.0 Description of Services
5.1 The Contractor agrees to provide the following services in accordance with the terms and conditions set out in this Contract:
(a) to regularly and promptly attend to all pickups and deliveries for Greyhound customers and accounts in accordance with instructions received from Greyhound dispatch service;
(b) … the Contractor will refuse to accept or deliver the shipment until such time the charges can be collected;
(c) to issue or obtain from shippers and Consignees all necessary busbills, shipping documents and delivery receipts for shipments;
(d) to tender to Greyhound no later than the end of the business day, all busbills, shipping documents, delivery receipts, driver manifest and invoice and charges collected in connection with the provision of services in this Paragraph 5.1;
(f) to refuse to accept damaged packages or baggage unless …;
(g) to refuse to accept packages or baggage which are obviously not in a condition to take ordinary handling by Greyhound or the Contractor …;
(m) to use his best efforts to solicit and obtain new accounts and customers within his assigned territory (the “Services”).
6.0 Compensation for Services
7.0 Operational Cost Savings
9.0 Mobile Radio
9.1 Greyhound shall provide a mobile radio to assist in servicing Greyhound customers.
9.2 The Contractor will lease a radio from Greyhound (the “Leased Radio”) or provide a radio subject to the inspection and approval of such radio by Greyhound. …
10.0 Vehicle and Uniform Requirements
The Contractor acknowledges that the reputation and success of Greyhound and the Contractor, is dependent upon the maintenance, by the Contractor of the highest standards in providing services to Greyhound customers and accounts. The parties further acknowledge and agree that both of their businesses will benefit by maintaining high standards when providing the Services to Greyhound customers and accounts and by emphasizing Greyhound presence to public, and to that end the Contractor agrees to adopt the following policies and guidelines:
(a) the Contractor’s vehicle shall be painted a white colour approved by Greyhound …. The vehicle shall be maintained in a first class operating condition at all times …;
(b) the Contractor’s vehicle shall display only the name and insignia of Greyhound … and/or such other companies as Greyhound may designate from time to time, and no other signage, decals or advertising of any kind whatsoever shall be displayed unless prior written approval is obtained from Greyhound;
(c) the Contractor shall wear a uniform, designated or approved by Greyhound, at all times while the services are being provided to Greyhound customers and accounts and the Contractor shall keep the uniform in a clean and presentable condition at all times. …;
12.0 Greyhound’s Right of Supervision and Inspection
12.1 The actual performance and supervision of the Services provided by the Contractor under this Contract shall be by the Contractor, but Greyhound shall designate a representative or representatives who shall at all times be permitted to observe or inspect the Services being performed by the Contractor to judge whether the Services are being performed by the Contractor in accordance with the terms and conditions of this Contract.
13.0 Operations Review
13.1 Greyhound management and the Contractor shall meet on a regular basis to review the provision of Services and other matters covered by this Contract….
15.0 Covenants of the Contractor
15.1 The Contractor covenants and agrees that during the course of providing Services he shall:
(g) apply for and be covered by Workers’ Compensation and pay all premium assessments and provide proof on a quarterly basis of payment of assessments and coverage;
(h) abide by the routing instructions of the Shipper on all busbills and shipping documents, and not to, directly or indirectly, by any device, or arrangement whatsoever, pay, refund, or rebate to any shipper, Consignee or Owner all or any part of the payments received by the Contractor under this Contract;
(j) not divulge to any person, firm or corporation any trade secrets, procedure or technique disclosed to him by Greyhound;
(l) not participate or be engaged in any activity which, either directly or indirectly, competes or interferes with Greyhound business or the provision of the Services by the Contractor under this Contract;
16.0 Covenants of Greyhound
16.1 Greyhound covenants and agrees:
(f) to provide the Contractor with valid Motor Carrier licence plates for his vehicle for as long as the Contractor is providing services under this Contract. …
19.0 Termination
19.1 The parties agree that a breach of any of the following obligations, or the occurrence of any of the following events, shall be deemed to be a fundamental breach of this Contract giving the party not in breach a right to terminate the Contract immediately by delivering a written notice to the other party setting out the effective date of termination and the rights and liabilities of the parties shall thereafter be determined in accordance with Paragraph 19 of this Contract:
(g) any act or omission by the Contractor which, as a matter of law, would constitute cause for the termination of an employee.
20.0 Right to Terminate
20.1 In addition to the termination under Paragraph 19.1 or 20.1 of this Contract either party may give the other party thirty (30) days written notice of their intention to terminate this Contract …;
22.0 Non-Competition
22.1 In consideration of Greyhound entering into this Contract with the Contractor and allowing the Contractor to service Greyhound customers and accounts, the Contractor agrees … that during the term of this Contract, and for a period of ninety (90) days from the termination of this Contract, the Contractor shall not either personally or by his agent …. Canvas, solicit or do business of a similar nature as that of Greyhound (transportation division) with any person, firm … who: …
22.2 The Contractor acknowledges that any and all trade secrets … are revealed in confidence and the Contractor expressly agrees to keep and respect the confidence ….
23.0 General
23.10 The contractor shall not assign or sub-contract any of his rights or duties under this Contract without the prior written consent of Greyhound. It is appreciated from time to time, that a substitute driver may be used to perform Services in the Contractor’s scheduled territory. However, this replacement can only be used for holiday relief, sickness or an emergency situation. The Contractor is allowed a maximum four (4) weeks holiday per annum, unless otherwise agreed to in writing by Greyhound.
Customers and Territory
22 Owner-operators are assigned a territory, or route, where they provide P&D services, at the commencement of the relationship between them and Greyhound. Leach explained, for example, that Route 26, Lefler’s territory, was established based on revenue potential. In awarding territories, Greyhound considers the “seniority” of an of the owner-operators who has expressed an interest: if the owner-operator qualify, has the right vehicle, the “date of hire” is used. In 1996, GCX and the Union entered into an agreement whereby newly created routes and vacancies will be posted and awarded based — largely — on seniority. It is clear from the owner-operator contract that the rights to the territory are “not exclusive” and that Greyhound reserves the right to alter the owner-operator’s territory, or designate a different territory, “if, in Greyhound’s opinion changes … are necessary to properly and effectively service and expand Greyhound customers and accounts. As well, Greyhound retains the right to use “floater drivers” within the territory from time to time.
23 While Greyhound decides the route, delivery schedules etc. is left up to the owner-operators’s discretion. Leach explained that while territories are not assigned until the owner-operator cannot service the customers because he or she is too busy, Greyhound, nevertheless, retains the right to make changes. In practice, he explained, re-alignment of territories occur following discussions between the owner-operator and Greyhound.
24 In one case, in September 1997, Greyhound issued a letter to an owner-operator adding to his route:
Upon reviewing your revenue earnings for the past 5 months on route #23 it was found that you earned an average of $1,467.87 per month. I am aware that you have made an effort to get new customers to increase your revenues, however at this time, no significant increases have been noticed. Your current guarantee is $2,800.00 per month leaving you short of achieving a break even point. Route #54 has been experiencing unprecedented growth and as the route in which you operate borders route #54 the natural progression of your route is to take over areas which logically enhance the serviceability of route #54 and the profitability of route #23. Based on the above, you will be given no opportunity to refuse the additional revenues being added to route #23. The contract clearly state that we have the right to “assign” territory if we can show that the changes are necessary to properly and effectively service and expand Greyhound customers and accounts.
The are in question is East of 198th St. to 216th St. and fromt he freeway north to the river. On receipt of this letter you will commence servicing this area as per section 3.1 of the Owner Operators contract.
25 While this letter was issued in 1997, I understood Leach’s evidence to be that similar changes had been authorized in 1996.
26 When routes are re-assigned, the owner-operators may no longer service the customers in the area assigned to another route. In 1996, Greyhound warned an owner-operator that he was “not adhering to the guidelines that were set up when we adjusted your route and route #23”, that he “under no circumstances <were> to go into any customers in route #23 territory”, and that he was “to service <his> designated territory only.” Greyhound warned the owner-operator that his contract could be cancelled if he did not stop. In a further letter, Greyhound told him to direct calls from outside his territory to dispatch to be rerouted to the appropriate driver/route. Leach agreed that such letters were “typical”.
27 Greyhound regards the customers as belonging to it, and not the owner-operators. The owner-operator contract makes numerous references to “Greyhound customers and accounts” and that the owner-operators “provide pickup and delivery service” to those customer and accounts. The owner-operators called to testify did not disagree that the customers were Greyhound’s, despite the fact that they are involved in developing the business, i.e., expand the customer base and increase their earnings. Ho said that the customers are Greyhound’s “but I built the area”. He also agreed that the customer he brought into the business became Greyhound’s and that their account was with Greyhound. Grewal also agreed that it was his understanding that the “customers were Greyhound’s”. Leach explained that at least 60 per cent of the business is on account with Greyhound. Ho does not bill the customers, and they do not pay him. In the past, under A-1, owner-operators billed customers, were paid by them, and then paid A-1 a 30 per cent commission. Now, the situation is the reverse, and the owner-operators are paid by Greyhound.
28 The owner-operator contract provides that the “contractor shall not assign or sub-contract any of his rights or duties .. without the prior written consent of Greyhound.” Grewal agreed that he could not sell or assign the $96,000 a year route that he, from all the available evidence, had been very successful in building over the years as an owner-operator with Greyhound.
29 The owner-operators are identified with Greyhound in certain respects. Their vehicles are required to be painted in the approved white colour and must carry the Greyhound logo or decal. The contract between Greyhound and the owner-operators for provide expressly for this requirement and it appears to be enforced. In 1995, when Greyhound developed a new decal, owner-operators were required to put it on their vehicles and “any owner-operator whose vehicle does not have this decal on will not be permitted to work until such time as the decal is in place”. Lefler’s truck has displayed prominently on the door “Owner-Operator – Brent Lefler” (it also has the Greyhound logo on the side). Ho agreed that the colour and the logo provided for “name recognition” by customers.
30 Uniforms, such as pants, shirt and jacket, the cost of which is split 50-50 between greyhound and the owner-operators, and deducted off their invoices, according to Leach, assist in brand name recognition, much like “Subway”. Greyhound prefer that the owner-operators wear uniforms but many do not. This requirement, which is also expressly provided for in the owner-operator contract, does not appear to be strictly enforced. The relief drivers, hired by owner-operators, are not supplied with uniforms. Grewal wears a Greyhound shirt with a “Jugster” hat.
31 It is clear that Greyhound identifies with — and trades on — its logo, the logo with the Greyhound. Leach agreed that this logo has “real value”. Ho agreed that customers identified his truck with Greyhound. Ho testified that he would — on his own initiative, and without being told by Greyhound — approach new potential customers and get names of contacts which he then provided to Greyhound’s sales department. The sales department follow up. His reason for promoting the business was that he would get the commissions from the new business. In cross examination, he also said that Greyhound asked him for a list of “his” regular customers in order that they could be served if he was unable to do the work. He agreed that Greyhound does the marketing. If Greyhound got the business, bot he and Greyhound would benefit. The owner-operators are able to purchase business cards from Greyhound, which identify them as owner-operators.
Compensation
32 Unlike employees, such as those who operate the terminal, the busses and line haul trucks, and who are paid on an hourly basis, Greyhound pays the owner-operators on a piece basis. In Leach’s words: “the more they do, the more they are paid”. I accept that the tariffs are set by Greyhound. He explained that P&D drivers — generally — are paid in the following manner:
1) 70% of the “add on” charge per parcel. This works as follows. A customer pays Greyhound $3.50 for pick-up and delivery to a Greyhound terminal (or agent). The owner-operator who does the pick-up is paid 70 per cent of the $3.50, or $2.45. The parcel is then transported by Greyhound bus or line haul truck to another Greyhound terminal (or agent). Upon arrival of the parcel, the recipient is contacted and have to options of having it delivered by an owner-operator or pick-up by the recipient. If delivery by an owner-operator is required, that owner-operator is paid 70 per cent of $3.50. The cost to the customer(s) is then, for example, $3.50 plus $10.00 plus $3.50, for a total of $17.00.
2) $2.00 for a “door-to-door” delivery. In such case, there is one rate for the customer with a “built in” discount, which is shared between Greyhound and the owner-operator, consisting of the “station-to-station” charge plus $2.00 at either end. The owner-operators at each end receive $2.00 for their services.
3) There is a another rate for “quick” deliveries, which are picked up in the morning and delivered in the afternoon. For these, the owner-operators receives 35 or 70 per cent of the total billing, depending on whether one or two owner-operators are involved in the transaction.
33 In some cases, the above rates are discounted. Ho said that he could — and, had in fact — given discounts to customers. I understood his evidence to be that he had done so in 1994 without Greyhound’s approval or requirement. Grewal also explained that he would give “discounts to get the business” and that he “made the decision”. He acknowledged that at leat in one case a computer was supplied to the customer by Greyhound and that Greyhound had asked him to give the discount.
34 Moreover, certain owner-operators are also paid a flat rate for operating the shuttle between Vancouver and, for example, the Surrey agent.
35 Owner-operators are guaranteed a certain minimum payment per month, between $2,000 and $2,800. All, except four, owner-operators are off the “guarantee”. In Lefler’s case, the minimum was $2,800 but, according to Leach, he has been off the “guarantee” for “quite some time”. The earnings of owner-operators appears to vary considerably. From Kummer’s “Statement of Business Activities” to Revenue Canada for 1996, it appears that his gross income was approximately $45,000. Grewal, who agreed in cross examination that he was the #1 P&D driver, estimated his monthly revenues at $9,000, or $7,000 in a “bad month”.
36 Owner-operators receive a bi-weekly statement setting out their driver number, vendor number for “accounts payable”, daily commissions, advances against the guaranteed minimum and deductions. Greyhound does not deduct for CPP, EI, taxes and benefit premiums from the amounts paid out to the P&D drivers. As well, I understood from Ho’s evidence that he receives an annual statement of his earnings from Greyhound. The bi-weekly statement lists a number of deductions, cash shortage, RRSP, radio lease, WCB, truck expenses, union dues and other.
37 For the period March 29 to April 11, 1996, for example, Lefler was paid daily commissions ranging from $126.61 to $222.72 for a total of $1,569.46, less $269.31 deductions for cash shortage, RRSP, radio lease, WCB and union dues, for a net cheque of $1,300.15.
38 He was not paid any commissions for a statutory holiday during the period. Greyhound deducted the following amounts from Lefler for the period: $2.55 for “cash shortage”, $200 for RRSP, $18.46 for radio lease, $15.00 for WCB and $33.30 for union dues. Between June 1995 and April 1996, Greyhound deducted $74.81 from Lefler, and between February 1996 and July 1996, $64.48 from Kummer, mostly, it would appear, on account of cash shortages. Labour Canada found that these deductions for cash shortages contravened the Code.
39 Owner-operators do not participate in the pension plan (there is an optional RRSP plan, but not many owner-operators participate), get medical and dental benefits, long and short-term disability benefits or receive bus passes. While owner-operators participate in the life insurance plan ($25,000), this is — explained to be — the result of Greyhound’s greater buying power.
Business Equipment, Costs and Expenses
40 Leach testified that the owner-operators, including Lefler and Kummer, own the tools of the business: vehicle, radio and uniform and that they are responsible for their own costs related to the operation of their business. Trucks used by Greyhound employees are owned by Greyhound and their expenses are paid by Greyhound.
41 Ho and Grewal testified that they own their own vehicles. Ho owns an older one-ton cube van; Grewal owns a late model three-ton van. Grewal testified that he purchased the van a couple of years ago for $46,000, financed in part through a bank loan. Both also own — and paid for — a hand cart, or “hand truck”, for lifting heavy packages. The owner-operators are responsible for fuel and maintenance of their vehicles. Grewal and Ho testified that their vehicle maintenance expenses, such as tires, oil changes, oil filters, brakes, starters, water pumps, radiators, transmissions, other parts, and repairs are substantial. They are responsible for those costs without assistance from Greyhound. Ho estimated that, in 1996, his expenses for fuel and vehicle maintenance were approximately $15,000.
42 Owner-operators are also responsible for such employees as they may have for period when they are not willing or able to do the work themselves.
43 While it is mandatory for the owner-operators to have a radio, through which they communicate with dispatch and customer requests are transmitted, they may purchase their own, lease from Greyhound or lease from someone other than Greyhound. Ho owns his radio; Grewal leases his from Greyhound for $40 per month. Greyhound holds the licence for the radio station and frequency, and charge the owner-operators a fee for the use. As I understood the evidence, there are no restrictions as to the use of the radio.
44 Apart from dispatch, customers have several ways of contacting the owner-operators directly. The P&D drivers may have cell phones or pagers. Lefler has a cell phone. Both Ho and Grewal have cell phones which are used by customers to contact them directly. Ho explained that he has provided his cell phone number to about a dozen good customers. The owner-operators pay for the cell phones and carry the costs of their home offices, including telephones and computers. Grewal testified that he spends almost $167 on average per month on his cell phone.
45 In addition, the owner-operators are responsible for their own insurance. I understood the evidence to be that Greyhound require the owner-operators to acquire and maintain liability, third party liability, cargo bonding (covers the product the owner-operators are carrying in their vehicles) and vehicle registration. Grewal said that he spends $3,600 per year on insurance for his truck. Owner-operators are responsible for motor vehicle licensing requirements.
46 Owner-operators are now, as well, directly responsible for their own Workers’ Compensation coverage. However, between 1992 and 1997, Greyhound made deductions from driver commissions and remittances to WCB on their behalf. Deductions made in error were paid back to the owner-operators. Currently, all 40 owner-operators deal directly with WCB, though some 12-13 are still waiting for their confirmation numbers. Lefler made an application for coverage in August 1997 and Kummer has been registered as a firm with the WCB since 1993.
47 While Greyhound advertises, owner-operators may do additional advertising, or engage in promotional activities, if they wish, including entertaining prospective customers. Greyhound encourages them to purchase Greyhound paraphernalia for their customers. It is not clear how much owner-operators spend on these activities. It is unlikely to be much compared to Greyhound. Ho agreed that Greyhound has supplied him with hats to give to customers. Grewal said that he bought hats from Greyhound at a discount. He also said that he would make “them” — presumably Greyhound — give him a few by “whining”. Both Ho and Grewal buy gifts for “their” customers. Grewal said he would frequently buy a “6-pack” a week for customers to “keep them happy” and get their business.
Work Hours and Scheduling of Work
48 Leach testified in direct examination that owner-operators, including Lefler and Kummer, do not have to sign in or out, nor do not have a specific time for reporting to work. Ho, as well, explained that he was not required to report to work at any specific time. In cross examination, however, Leach agreed that the business imposes certain constraints. The owner-operators are expected to be at the terminal no later than 9:00 in the morning, and expected to be “gone by 1:00” at lunch time. He was asked if Greyhound observes is they comply and answered that the “P&D supervisor knows if they’re in”.
49 The business schedule falls in waves: morning, noon and evening: in the morning and noon, a central aspect is transfers to other owner-operators; in the evening, it is the departure time for the line haul truck. Ho testified that his day on average started at 7:30-8:20 a.m. when he would attend at Greyhound’s terminal. He would find an open available bay door, back in his truck, and find the bin assigned to his route (#3), which had been loaded by the express clerks. He loads the truck, taking about 15 minutes. The order of loading his truck is determined by Ho according to his schedule of deliveries. When the loading is complete, he leaves the terminal to make his deliveries. He explained that he is usually back at the terminal between 11:30 and 12:30. He testified that he is not required by Greyhound to be there at a specific time. However, the owner-operators are usually back at the terminal around the same time. At the terminal he unloads the freight he has picked up in the morning and picks up deliveries for the afternoon, following the same procedure as in the morning. This takes about 15 minutes. He can have his lunch any time he wants and sometimes has “10 minutes for a sandwich”. Ho said that no one tells him what to do when he is at the Greyhound terminal. When some owner-operator do not arrive at lunch, and others have to wait for them to unload to get their freight, owner-operators get “on their case” and “verbally abuse them”. In the evening, the owner-operators return to the terminal to — again — unload their trucks between 4:00 and 7:00 p.m. They are expected to be at the terminal to meet the line haul which leaves at 7:00. Leach explained that some are in at 4:00, others are in later, at 6:00 or 6:25. They spend as little time as possible at the terminal.
50 While there may not be a specific time for reporting to work, there are expectations, as mentioned above, and Greyhound seeks to enforce those expectations. In a memorandum to “all courier drivers”, dated November 26, 1996, Keith LaCroix (Operations Supervisor) stated:
Due to continual delays during lunch time rush, all drivers will be required to depart from their base depots no later than 9:00 a.m. All drivers will be required to be back at the Vancouver depot for lunch rush by 12:15 p.m. unloaded by 12:30 p.m. and back on the road by 12:45 p.m. This means the Surrey drivers will depart from their meet by no later than 11:35 a.m. and the Langley drivers will depart from their meet no later than 11:25 a.m. I realize and appreciate the fact that all drivers would like to stay on their routes as long as possible, however, it has reached the point where the actions of 1 or 2 drivers are delaying and affecting the service quality of the entire courier fleet. Any Surrey or Langley drivers who continually delay the inbound shuttles will be responsible for shuttling his own freight.
51 Leach explained that the customer demands dictate when the owner-operators’ schedule. They do not have fixed hours of work per day or per week and Greyhound does not monitor their hours of work or set their lunch hours or breaks. From Greyhound’s standpoint, they are free to “do whatever”, including “fishing”, buying groceries or attend to personal matters. Leach explained that there are no restrictions with respect to the use of the vehicles for non-Greyhound business. The owner-operators may conduct their business, some are involved with Amway. Ho testified that when he is on his route he attends to whatever tasks he chooses, including occasional personal shopping. He explained that he operated a pop vending machine business for some six months in 1996. On his own initiative, he installed and serviced pop machines installed at Greyhound customer locations on his route. He used his truck for this business.
52 Leach testified, in cross examination, that dispatch receives 1,200 calls per day and, given that there are 40 drivers, there are approximately 30 dispatched calls per driver. Leach also explained that the number of pick-ups per day was around 60-70. A significant number of the balance are regular customers where the owner-operators go everyday. In those cases, there is no need for dispatch. Large volume or regular customers, for example, are on a time schedule and the sequence of deliveries and pick-ups is established by the owner-operators, including Lefler and Kummer. Scheduled pick-ups could be 85-90 per cent, depending on the route. Other customers will contact the owner-operators directly. Leach was not sure of the ratio of dispatched calls to direct calls, in some cases it is 10-20%, depending on how established the owner-operators are.
53 Dispatch provides the customer’s request, pickup, address, weight, number of pieces, address — the information necessary to secure the pickup from the customer, such as when the pickup is ready. Leach testified that the owner-operators have lots of discretion: they can decide to do the pickup even if its at night, they can refuse because they have too many calls to attend to, or the call is too far out of the area at the time, or they are not available due to vehicle breakdown or emergencies at home. The owner-operators are responsible to provide relief. However, in emergencies, Greyhound will cover for the owner-operators at their expense unless Greyhound send someone right away because of an accident (in which case, Greyhound will pay). If they have too much work, the owner-operators will turn work down. They will look at the most lucrative work and turn down what is not so, for example, residential. In that case, Greyhound will send in a contractor.
54 There are no reporting requirements for the owner-operators other than that they are required to turn in their busbills to the cashier at the end of the day. The owner-operators reconcile before they hand in the cash and they are invoiced for shortages. The amounts are entered twice by Greyhound: once for billing purposes and once for commissions. Coach and line haul drivers fill in trip reports, dealing with such matters as tickets, schedule number, number on/off, log hours servicing and driving, calculate their pay (”trip envelope” and “book in/book out”). Payroll, located in Calgary, processes the pay for employees, whereas owner-operators are paid by accounts payable. The invoices are processed in Vancouver.
55 Greyhound has a supervisor for the downtown Vancouver owner-operators. However, according to Greyhound’s evidence, his role was limited to see to it that freight is sorted into containers, that the shuttle operates, and to call in a courier is the owner-operators do not show up. He does not go out into the territories to monitor the owner-operators. Lefter, in Surrey, has no supervisor. However, it is clear from several memoranda, that he is aware if owner-operators are late at arriving at the terminal and performs the services in a timely manner to ensure proper service of the customers.
56 Customer complaints are received in the first instance by Greyhound’s customer service. There are very few complaints which Greyhound attributes to the low turn-over among the owner-operators. However, if Greyhound gets complaints, it will talk to the owner-operators to attempt to rectify the matter. Ultimately, Leach testified, Greyhound could terminate the contract if it determined that the owner-operator was in breach.
Personal Service and Relief Drivers
57 The owner-operator contract provides:
23.10 The contractor shall not assign or subcontract any of his rights or duties under this Contract without the prior written consent of Greyhound. It is appreciated from time to time, that a substitute driver may be used to perform Services in the Contractor’s scheduled territory. However, this replacement can only be used for holiday relief, sickness or an emergency situation. The Contractor is allowed a maximum four (4) weeks holiday per annum, unless otherwise agreed to in writing by Greyhound.
58 Nevertheless, Leach testified that owner-operators, including Lefler and Kummer, do not have to perform the work themselves. Greyhound does not pay for the replacement drivers, their benefits or WCB. Lefler, for example, had a relief driver for six months in the beginning of 1998. The relief driver, apparently his cousin, was employed by Lefler and Greyhound did not object as long as the services were provided. If case of illness and vacation time, the owner-operators are responsible to provide relief. Leach stated that holidays are purely within the owner-operators’ discretion: they do not book or schedule holidays with Greyhound. In cross examination, Leach agreed that he “supposed that Greyhound could go back to the written agreement and ask for its consent”. However, his main concern was that the services were being provided.
59 Ho explained that he has two relief drivers, trained and supervised by him, for when he is unable to work himself. His company, 3H, pays for these employees and he did not get Greyhound’s approval or permission to hire them. Ho further testified that the last time he operated his van was in September of 1998. In 1997, he took 50 weeks off to attend to another business he was involved with, and — during that time — his truck was operated by his relief drivers. He agrees that he talked to Greyhound about this and had its permission. Grewal also uses relief drivers, paid for, hired, trained and supervised by himself. He explained that he uses relief drivers regularly to bring the truck in to the terminal in the evening and to allow him to take Fridays off. He has not worked Fridays for the last four to five years.
Company Manuals, Policies and Miscellaneous Matters
60 Unlike bus drivers or line haul drivers, who receive safety, customer service, safe driving and sensitivity training when they are hired, there is no formal driver training for owner-operators. Owner-operators do not have manuals setting out expectations, driving standards, and Greyhound’s standards of performance. Greyhound’s Safety Department monitors bus and line haul driver performance, operation of equipment, accident and incidents. There is a procedure for progressive driver discipline. Though there are instances where Owner-operators have been subject to discipline — one occasion, a driver was suspended for three days — progressive discipline is not customarily applied to owner-operators.
61 There is an Operator’s Rule Book, which also contains detailed safety rules, setting out Greyhound’s rules on such matters as alcoholic beverages, smoking, drugs, animals or pets, conduct and courtesy, discipline, log books, lost articles, tire checks and timetables. The drivers must acknowledge receipt of the book for disciplinary purposes. The purpose of these rules is progressive discipline. The receipt is kept in their personnel file. There is no similar book for owner-operators. Moreover, the rules do not apply to owner-operators. Leach testified that, for example, while the rules prohibited coach drivers from using tobacco products “while operating … while on Company time”, no such rule applied to owner-operators. Similarly, while coach and line haul drivers must wear the prescribed uniform, that rule is not enforced for the owner-operators. Coach and line haul drivers must fill out incident and accident reports/forms and provide them to their supervisor. These form are not issued to owner-operators nor are they required to fill them in.
62 Coach and line haul drivers must do a “pre-trip” inspection to ensure that the vehicle is in order. Failure to do so may result in discipline. There is no similar requirement for owner-operators. As well, the coach and line haul drivers must fill in a log sheet of their hours for the Department of Transportation. This is to ensure that they get proper rest. The log sheet is filled in by the driver. There is no similar document for the owner-operators. Leach explained that the rules and policies were in place to safeguard passengers. Greyhound also has a Manual of Rules and Regulations, for much the same reasons, which applies to terminal employees and a separate manual for maintenance employees. Leach testified that these rules are enforced by Greyhound.
63 Leach testified that Greyhound’s confidentiality policy does not apply to owner-operators. Similarly, the policy pertaining to employee conduct applies to “all employees” of Greyhound. The harassment policy, as I understood the evidence, applies to the terminal area and, therefore, harassment by an owner-operator would “normally not” be tolerated. Greyhound does not apply its occupational health policies to owner-operators. The Employee Assistance Plan does not apply to owner-operators.
64 Leach agreed that there are meetings between Greyhound and the owner-operators, when there are information issues so they can inform the customers, though he characterized them as sporadic. The meetings are held after hours, attendance is not mandatory and the owner-operators are not compensated for their participation. Leach testified to numerous other differences between “regular” employees and owner-operators. Employees fill in TD-1 forms (Personal Tax Credits return), owner-operators do not. A change of status form, dealing with such matters as salary changes, termination, leave and promotion is utilized for employees, not for owner-operators. The Human Resources Department has no involvement with owner-operators. When new staff — non-Union as well as Union — is hired, it must be approved by a Vice President. That process is not followed for owner-operators. Greyhound utilizes a Personnel Record (Form 6) for employees. A hiring, for example, is reported to the Union. The Form sets out the employees class such as driver, maintenance, terminal, general office etc. This Form is not used for owner-operators. Greyhound employees an orientation checklist for new employees, not used in conjunction with owner-operators. When an employee leaves Greyhound, Human Resources conducts an exit interview. This is not done for owner-operators. There is no application for employment for owner-operators, only expressions of interest. Lefler, for example, sent a letter indicating his interest in Route 26. The only orientation they get is where the freight is.
65 Owner-operators have vendor numbers and route numbers, not employee numbers. They are not provided with T-4 slips. Greyhound does not issue Records of Employment for owner-operators.
66 Leach testified that while employees receive awards and pins for service and length of service, those awards are not extended to owner-operators. As well, owner-operators are not included in the employment equity program.
Analysis and Decision
67 While it is clear that Part III of the Code (Standard Hours, Wages, Vacations and Holidays) applies to an “employee”, there is no definition to assist in the determination of employee status. Part III applies to “employment in or in connection with the operation of any federal work, undertaking or business” (see Section 167). Various provisions of Part III refer to “employees” and “employers”. For the purposes of Part III, an “employer” is defined to mean “any person who employs one or more employees”. There is no dispute that the parties are under the federal jurisdiction and there is no dispute that owner-operators, i.e., Lefler and Kummer, are dependent contractor within the meaning — and for the purposes — of Part I of the Code. They enjoy union representation and are covered by a collective agreement. This aspect is one of the unusual features of this case.
68 Greyhound argues that Lefler and Kummer are not employees for the purposes of Part III. The first part of its argument relates to the statutory language adopted by Parliament. Greyhound argues that the concept of a “dependent contractor” in Part I of the Code (Industrial Relations) is not included in Part III. Section 3 — in Part I — of the Code begins with the words “in this Part” and goes on to define an “employee” to mean “any person employed by an employer and includes a dependent contractor …”. Section 3 also includes a definition of an “employer”.
”employer” means
(a) any person who employs one or more employees, and
(b) in respect of a dependent contractor, such person as, in the opinion of the Board, has a relationship with the dependent contractor to such an extent that the arrangement that governs the performance of services by the dependent contractor for that person can be subject of collective bargaining;
69 As mentioned, in Part I, the Code expressly for a defines of a “dependent contractor”:
”dependent contractor” means
(a) the owner, purchaser or lessee of a vehicle used for hauling, other than on rails or tracks, livestock, liquids, goods, merchandise or other materials, who is party to a contract, oral or in writing, under the terms of which he is
(i) required to provide the vehicle by means of which he performs the contract and to operate the vehicle in accordance with the contract, and
(ii) entitled to retain for his own use from time to time any sum of money that remains after the cost of his performance of the contract is deducted from the amount he is paid, in accordance with the contract for that performance,
. . .
(c) any other person who, whether or not employed under a contract of employment, performs work or services for another person on such terms and conditions that he is, in relation to that person, in a position of economic dependence on, an under an obligation to perform duties for, that other person”
70 In Part II (Occupational Health and Safety) the Code defines “employee” differently: “employee” means a person employed by an employer, and an “employer” means a person who employs one or more employees and includes an employer’s organization and any person who acts on behalf of an employer (Section 122). In Part III, there is no definition of an “employee”, and the definition of an “employer”, again, is different from that in Part I and II: “employer” means any person who employs one or more employees (Section 166). Similar to Section 3, Section 122 and 166 begin with the words “in this Part”.
71 Greyhound submits that Parliament must be presumed to have used statutory language carefully and consistently “so that within a statute … the same words have the same meaning and different words have different meanings. … Once a particular way of expressing a meaning has been adopted, it is used each time that meaning is intended.” If the Parliament uses different words or different expressions, one may infer a different intention. The presumption of consistent expression applies within and across statutes (see Sullivan, Driedger on the Construction of Statutes (3rd ed.) Toronto and Vancouver: Butterworth, at 163-5). In the absence of a statutory definition, Greyhound says that Parliament did not carry over the concept of “dependent contractor” into Part III because it is not applicable and that I must turn to the common law to determine who is an “employee” for the purposes of that Part. At the end of the day, that is factual determination.
72 The Respondents argue that the term “employee” is open to interpretation and that I must have regard to the statutory purpose. The words “employer”, “employ” and “employment” are ambiguous and, therefore, the meaning attributed to them should be that which is consistent with the purpose of the statute and a broad and liberal interpretation should prevail (Stanley v. Road Link Transport Ltd. (1987), 17 C.C.E.L. 176 (Can.Adjud.(CLC Part III)), at 191 -2). The Respondents also rely on a decision of the Canada Labour Relations Board, U.A. v. C.N.T.U. (1982), 1 C.L.R.B.R. (N.S.) 129 (Can. L.R.B.) , where the Board conducted an extensive review of the case law with respect to dependent contractors. From that historical analysis the Respondents emphasize two aspects: subordination and inclusion. The fact that Part III does not contain a definition means that I should consider the objective of the statute, which is to provide minimum standards for those subordinate to an employing entity.
73 Moreover, the Respondents argue that the definition in Part I was put in because Parliament erroneously assumed that “employees” and “dependent contractors” were distinct and exclusive concepts, with no overlap between them, despite the fact that the common law had evolved to include dependent contractors in the concept of “employee” (Canadian Broadcasting Corporation, above, at 226-7). In other words, there is no need to resort to the concept of “dependent contractor” in order to consider a person an “employee” under the Code, since the concept of “dependent contractor” is already included in that of an “employee” (Canadian Broadcasting Corporation, above, at 232). The Code’s explicit reference to the “dependent contractor” added nothing, except an indication of the importance of economic subordination. It is unimportant that Part III does not contain a reference to “dependent contractor” because is unnecessary for the Code to expressly include them.
74 I do not accept the Respondents’ argument that Parliament “erroneously” included “dependent contractors” in Part I. It is clear from the legislation that Parliament did — in fact — include “dependent contractors”. I cannot ignore that. It would be inconsistent with generally accepted principles of statutory interpretation if I did. However, that, in my view, does not necessarily mean that a person, who is a “dependent contractor” may not be an “employee” for the purposes of Part III. Parliament limited the application of the definition of “dependent contractors” to Part I (Industrial relations). Therefore, a determination that a person is a “dependent contractor” under Part I does not carry over into Part III; the person must be found to be an “employee” for the purposes of Part III.
75 Both parties refer me to several cases where owner-operators have been found — or not found — to be employees, which I have considered. The case law cited by Greyhound in support of a conclusion that owner-operators are not employees for the purposes of Part III include: Resto Vimont P.H. Inc. v. Canada (Minister of National Revenue), [1997] T.C.J. No. 1166 (T.C.C.); Ron Bednar Trucking -and- Brisebois [1997] C.L.A.D. No. 775; Knetch -and- D.C. Dawson Driver Service [1996] C.L.A.D. No. 122; E. & G. Davidson Trucking -and- Young [1995] C.L.A.D. No. 1009; Insurance Courier Services v. Lockhart, [1996] C.L.A.D. No. 110 (Can.Adjud.(CLC Part III)); R.W.D.S.U. v. Metroland Printing, Publishing & Distributing Ltd., [1993] O.L.R.B. Rep. 473 (Ont. L.R.B.); Fuson v. Libra Transport Ltd., [1995] C.L.A.D. No. 832 (Alta. Arb.); Greyhound Lines of Canada Ltd. operating as Toyo Servicing, (1994) Unreported, C.L.R.B. Decision No. 1301. The Respondents also refer me several cases: Rousell v. Prairie Implement Manufacturers Assn. (1992), 44 C.C.E.L. 243 (Sask. Q.B.) ; Head v. Inter Tan Canada Ltd. (1991), 38 C.C.E.L. 159 (Ont. Gen. Div.) ; U.A., Local 488 v. Midwest Pipelines Contractors Ltd., [1989] Alta. L.R.B.R. 166 (Alta. L.R.B.); and Jaremko v. A.E. LePage Real Estate Services Ltd. (1987), 17 C.C.E.L. 262 (Ont. H.C.) .
76 Thus when Greyhound argues that I should adopt the common law approach to determine whether Lefler and Kummer are employees for the purposes of Part III of the Code, I agree to the extent that the common law tests are relevant tools to “fill the definitional void”. However, in my view, the above militates against a blind reliance on tests developed for different purposes. In particular, Greyhound points to the “four-in-one” test” — (1) control; (2) ownership of tools; (3) chance of profit; and (4) risk of loss — with emphasis on the combined force of the whole scheme of operations (Wiebe Door Services Ltd. v. Minister of National Revenue (1986), 87 D.T.C. 5025 (Fed. C.A.), at 5029 ); Christie et al., Employment Law in Canada (2nd ed.), Toronto and Vancouver: Butterworth). Although the Respondents emphasize other tests, as well, there is not, in my view, much dispute with respect to the general legal parameters applicable to the determination of “employee” status. The Respondents refer me to the “control test”, “fourfold test”, the “four-in-one test” and the “integration test”. In Montreal (City) v. Montreal Locomotive Works Ltd. (1946), [1947] 1 D.L.R. 161 (Canada P.C.), at 169, the Privy Council stated: “In this way it is sometimes possible to decide the issue by raising as the crucial question whose business is it”. Ultimately, both parties argued that “employee” status in this case could be decided by answering this question.
77 The Respondents emphasize the control test, or the right to exercise control, as an important indicator of the existence of an employment relationship. The employment relationship is based on control. The Employer wants to maintain control but does not want the responsibility that goes with it: the relationship in the case at hand is structured to give control to the employer. According to Ball, Canadian Employment Law, Aurora: Canada Law Books,, at 3-6 to 3-7:
Other indicia of control include: being subject to company policy and discipline; ability to decide in which method the work is to be performed; the person who decides when the work is to be performed; the worker being required to work specific hours; the ability to determine one’s own lunch hours; the ability to determine which customers one can serve; the worker being required to make activity reports; the ability or inability to decide where to perform the work; the ability or inability to decide to whom the worker can sell the goods; the ability or inability of the worker, without authority, to hire other individuals to perform the work; the obligation of the worker to attend meetings; assistance and guidance to the worker from the payer in connection to the work being performed; the requirement of obtaining approval for vacation time; the ability or inability to work for others; the payer reserving the right to discipline the worker; and the payer reserving power to set dress and conduct codes for the worker.
78 I agree that control is an important indicia of an employment relationship. However, given the complexity of the relationship between the owner-operators and Greyhound, it is appropriate that I consider all relevant factors.
79 I turn to the general principles which, in my view, are applicable in determining whether a person is an “employee” for the purposes of Part III of the Code. First, it is well established that these definitions are to be given a broad and liberal interpretation. Second, my interpretation must take into account the purposes of the Code. It follows that I agree with the Respondents’ submissions in that respect. The courts and other tribunals have on many occasions confirmed the remedial nature of the Code and similar legislation within the provincial jurisdiction. I accept that the basic purpose of the Code is the protection of employees through minimum standards of employment and that an interpretation which extends that protection is to be preferred over one which does not (see, for example, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 (S.C.C.)). In that regard I refer, as well, to Section 168(1) of the Code which specifically provides:
168(1) This Part and all regulations made under this Part apply notwithstanding any other law or any custom, contract or arrangement, but nothing in this Part shall be construed as affecting any rights or benefits of an employee under any law, custom, contract or arrangement that are more favourable to the employee than his rights or benefits under this Part.
80 The following comment from the decision of the British Columbia Employment Standards Tribunal in Knight Piesold Ltd., BCEST #D093/99, at pages 4-6, is useful:
Deciding whether a person is an employee or not often involve complicated issues of fact. The law is well established. Typically, it involves a consideration of common law tests developed by the courts over time, including such factors as control, ownership of tools, chance of profit, risk of loss and “integration” (see, for example, Wiebe Door Services Ltd. v. Minister of National Revenue (1986), 87 D.T.C. 5026 (F.C.A.) and Christie et al. Employment Law in Canada (2nd ed.) Toronto and Vancouver: Butterworth). As noted by the Privy Council in Montreal v. Montreal Locomotive Works, <1947> 1 D.L.R. 161, the question of employee status can be settled, in many cases, only by examining the whole of the relationship between the parties. In some cases it is possible to decide the issue by considering the question of “whose business is it”.
. . .
… As noted in Christie et al., above, at page 2.1-2.2 with respect to the common law tests of “employee” status:
In each of these contexts the purpose of characterizing a relationship as employment is quite different from the purpose of the characterization in the action for wrongful dismissal, the traditional common law action in which the two-party relationship that is the subject of this service is elaborated, to say nothing of the purpose of particular statutes in which the term may appear. … It follows that precedents arising under common law or under a particular statute can be legitimately rejected or modified when the question of “employee” status is asked for a different purpose.
With the statutory purpose in mind, the traditional common law tests assist in filling the definitional void in Section 1. …
81 Ball, Canadian Employment Law, Aurora: Canada Law Books, 1997, notes at 3-3:
Special considerations are relevant to several statutory regimes and certain types of relationships. Remedial statutes dealing with legislated social policy which do not have a specific definition for “employee”, “employment” and “employer” … will be interpreted liberally in the context of the Act to protect a larger class of individuals.
82 In my view, those principle are applicable.
83 Both parties refer to jurisprudence for the proposition I should consider the substance of the relationship. In other words, while the parties are free to label their relationship as they please, “the legal characterization of the relationship will be determined by actual conduct” and that I consider all the circumstances (see Ball, Canadian Employment Law, Aurora: Canada Law Books, 1997, at 3-1).
84 Both parties made reference to the collective agreement. Grey hound notes that only a few pages of the collective agreement applies to owner-operators and the agreement between Greyhound and each owner-operator is not enforced strictly. The Respondents argue that I must first consider that relationship between Greyhound and the owner-operators is governed by the collective agreement, negotiated between the Union and Greyhound, incorporating the individual owner-operator contracts. Due to the Union’s exclusive bargaining authority, the conduct of the dependent contractors become irrelevant. Conduct creates rights and responsibilities. However, the collective bargaining regime is not that flexible. If the individual contracts are not incorporated, they are void because they do not respect the Union’s exclusive bargaining authority. In the alternative, the Respondents suggest that I consider how the relationship actually works. In response to Greyhound’s argument that the agreement is not strictly enforced, the Respondents note that Article 23.8 provides that a failure of Greyhound to enforce does not constitute a waiver of its rights.
85 While the collective agreement — not surprisingly — utilizes employment concepts, such as bargaining representative, management rights, termination of services and grievance, in my view, that is not — per see — determinative of “employee” status under part III. The owner-operator agreement also includes concepts that are more corporate-commercial in nature. In any event, the question is whether the person in question otherwise meets the tests as discussed.
86 The presence of a collective agreement is one of the unusual features of this case. I do not accept the Respondents’ argument that, in effect, this case can be decided on the basis that the actual relationship — or conduct — between Greyhound and the owner-operators is irrelevant. The bargaining relationship and collective agreement is the result of proceedings and findings under Part I, where, as noted, the Code expressly provides for “dependent contractors”. Under Part I, “dependent contractors” are deemed employees based on economic dependency to whom bargaining rights are extended. The Union is certified to represent and bargain for the owner-operators under and in accordance with Part I, and the Union remains free to do so. The conduct of Greyhound and the owner-operators is relevant to my determination of “employee” status under Part III.
87 The parties’ arguments on the facts may be summarized as follows. First, Greyhound argues, the significant tools required to perform the duties of an owner-operator are owned by Lefler and Kummer; the vehicle, the radio and the uniform are paid for (in part) by the owner-operators. Greyhound does not supply an office, telephone or desk to the owner-operators. Second, Greyhound does not exercise any meaningful control over Lefler and Kummer with respect to hours worked, delivery priorities, work place rules, corporate policies, dispatching and supervision. It is significant, says Greyhound, that Lefler has not personally done the work himself. Third, the owner-operators are not an integral aspect of Greyhound’s operations, representing only a small portion of its overall business. Greyhound also point to the fact that it treats the owner-operators significantly differently from its employees: they are not treated as employees. Fourth, the owner-operators are business people with the risk and rewards as such. They are responsible the for the costs of their business. They are able to grow the business. For tax and workers’ compensation purposes, they are treated as self-employed. In the result, it is their business.
88 The Respondents’ answer to the question “whose business is it” is: it is Greyhound’s. The owner-operators serve Greyhound customers who pay Greyhound for the services. The preamble to the owner-operator agreement recognizes this and identifies the work as Greyhound’s: Greyhound operates a package and delivery service, and owner-operators “service Greyhound customers and accounts”. The routes are established by Greyhound and it can change or reduce the routes. The owner-operators cannot sell the business. The licence, under which they carry on business, is owned by A-1. They cannot compete with Greyhound. The owner-operators use the Greyhound logo and its marketing. Clothing identifies them as a part of the Greyhound family. There is no risk of loss present because of the guaranteed minimum. Ho testified that his cost per annum is $15,000. With a guarantee of $2,800 per month, there is no risk of loss. Chance of profit and risk of loss go together. The owner-operators are simply employees with incentive pay, depending on the volume of work (Section 166). The Respondents also argue that owner-operators are treated as employees and in some internal company memoranda are described as employees. Other memoranda attests to discipline of owner-operators. They are subject to various company policies, for example, the beard policy. The Respondents say that the P&D drivers are not an accessory. The express clerks are Greyhound employees. So are the dispatchers who tell the owner-operators what to do. Greyhound’s accounting staff handle the billing process. Greyhound’s marketing employees enter into contracts. None of this could be done without the P&D drivers, whether inner city or city to city. 70 per cent of the revenue goes to Greyhound. It is truly Greyhound’s business and the owner-operators are a part of it.
89 At “first blush” — to borrow a phrase from Ajax/Picking, above — « Conversion Note: The text from here to the next conversion note was too long to fit in a header/footer. » « Conversion Note: End of long data beginning at last Conversion note. » there is considerable support for a conclusion that Lefler and Kummer are employees. However, considering the evidence and submissions, the facts and the law, I have reached the conclusion that they are not employees for the purposes of Part III of the Code. Without going into all factors considered in detail, below are the significant reasons for my decision.
90 The owner-operators own (or lease) the equipment of their business, primarily vehicle, radio and cell phone. They pay for the cost of maintaining, operating and insuring their equipment. The vehicle alone represents a substantial investment on the part of the owner-operator. This, in my view, points towards independent contractor status. However, ownership of equipment is only one of the factors in the determination of status. It is possible to own and operate equipment and still be an employee. The owner-operators clearly do not operate in a vacuum. They operate in conjunction with Greyhound which owns or operates the dispatch system, the radio frequency and licence, the MCC licence under which the owner-operators carry out their business, and the facilities, including the network of intercity busses and line haul trucks linking various centres, through which parcels are channelled to and from the owner-operators. The GCX system, including marketing and accounting functions, is operated by Greyhound and its employees.
91 Respondents argue that the business is Greyhound’s and that the owner-operators are not “an accessory”. Greyhound argue that the owner-operators are not an integral part of its operations. As indicated above, the network of terminals/depots, connecting busses and line haul trucks, accounting, billing and marketing are done by Greyhound. It is clear that the courier business trade on Greyhound’s logo, decal, colour of vehicle — “name recognition”. On the other hand, I also accept that the owner-operators are a small part of Greyhound’s business. Station-to-station represents the bulk of Greyhound’s courier business, about 85 per cent of revenue. While I have some sympathy with the Respondents’ argument that the owner-operators are an integra part of Greyhound, I do not place much weight on that factor. I agree with the comments of MacGuigan J.A. in Wiebe Door, above, at 5028:
Lord Denning’s test may be more difficult to apply … the effect has been to dictate the answer through the very for of the question, by showing that without the work of the “employees” the “employer” would be out of business…. As thus applied, it can never be a fair test, because in a factual relationship of mutual dependency it must always result in an affirmative answer. If the businesses of both parties are so structured as to operate through each other, they could not survive independently without being restructured.
92 While it may be argued that the extent to which Greyhound exercises control over the owner-operators is considerable. Based on the language of the owner-operator agreement, for example, Greyhound has significant control over the “manner and means” of providing the service. In practice, however, the agreement is not strictly enforced.
93 The fact that Greyhound assigns the territory, which is not exclusive, and has the right to change it, tend to pull in towards “employee” status. However, while adjustments to territory are made from time to time, for example, if a territory is not viable, the owner-operator witnesses and Leach indicated that changes took place following discussions between Greyhound and the affected owner-operator. Ultimately, though, it was clear that Greyhound can change the territory, is prepared to do so, and — in fact — has done so on occasion. In practice changes to territories are “very infrequent”. Leach, Ho and Grewal agreed, despite the fact that the owner-operators had built the business and customer base in their territory, that the customers are Greyhound’s and understood that changes could be made which would impact on their livelihood. The fact that changes are made infrequently and made in the manner indicated is important. If changes were made regularly and without consultation, such changes would be more to pull in the direction that the owner-operators are employees.
94 In my view, the hours of work are not set by Greyhound, except to the extent that the hours of work follow the “flow” of the business in the morning, noon and night. In the morning and at noon, the owner-operators attend the terminal or depot to pick up and deliver, at that time the key is transfers to owner-operators. In the evening, the owner-operators attend to meet the departure of line-haul trucks. There is little monitoring of the owner-operators when they are on their routes. On their routes they are, according to Leach, free to “do whatever”. There was some evidence to support owner-operators determined their own lunch time, attend to personal errands etc., and I agree that the owner-operators have considerable freedom to schedule pick-ups and deliveries according to their own discretion. I did not understand Greyhound to be concerned about this: Greyhound was concerned simply about whether pick-ups and deliveries were being made. Scheduled pick-ups, large volume or regular customers, could be 85-90 per cent, depending on the route.
95 I understood the evidence to be that there are on average 30 dispatched call per driver per day. The ratio of dispatched calls to direct calls Leach “estimated” at 10-20%, depending on how established the owner-operator is. Dispatch provides the information necessary to secure the pickup from the customer, such as when the pickup is ready. Leach testified that the owner-operators have considerable discretion: they can decide to do the pickup even if its at night, they can refuse because they have too many calls to attend to, or the call is too far out of the area at the time, or they are not available.
96 Moreover, owner-operators can — and do — operate other businesses during the time they are on route. Apart from the restriction in the owner-operator agreement not to compete with Greyhound, i.e., the courier business, the owner-operators may use their equipment — trucks and radio — do perform non-Greyhound services, for example, moving furniture. Ho operated a vending machine business for a period. That, in my view, points towards independent contractor status. In Resto Viomont, above, the tax court found that pizza delivery drivers were not employees of Pizza Hut for the purposes of the (then) Unemployment Insurance Act. One of the factor relied upon by the court was that The drivers had the right to obtain other engagements at the same time as being engaged by Resto Vimont.
97 In my view, there is an element of chance of profit and risk of loss. First, the owner-operators can increase their revenues by performing more services. As Leach stated “the more they do, the more they earn”. The owner-operators regarded themselves as business people and proudly told how they had developed the business in their respective territories. Secondly, the owner-operators are responsible for the costs of the business. They supply the vehicle, as mentioned by Ho and Grewal, financed by them selves, in part through bank loans. The owner-operators are responsible for the operating, maintenance and insurance costs of the equipment. Grewal testified that he did some vehicle repairs on his own to save money. If the owner-operators reduce or minimize the “costs of doing business”, everything else being equal, they increase their profit. The fact that they are paid on a piece basis is not inconsistent with “employee” status (Section 166 “wages”). While the minimum “guarantee” of $2,000-2,800, depending on the size of the vehicle, as well, points towards “employee” status, the evidence was that almost all of the owner-operators were off the “guarantee”. I agree that the “guarantee” ensures that the owner-operators will recover, at least, their costs — Ho testified that his annual costs for fuel and maintenance were $15,000. In the circumstances, the “guarantee” does not preclude a finding that the owner-operators are independent contractors.
98 In my view, one of the most important factors in this case, is the fact that owner-operators regularly engage and utilize their own employees to perform the services Greyhound in a manner apparently contrary to the strict language of the owner-operator contract which provides:
23.10 The contractor shall not assign or subcontract any of his rights or duties under this Contract without the prior written consent of Greyhound. It is appreciated from time to time, that a substitute driver may be used to perform Services in the Contractor’s scheduled territory. However, this replacement can only be used for holiday relief, sickness or an emergency situation. The Contractor is allowed a maximum four (4) weeks holiday per annum, unless otherwise agreed to in writing by Greyhound.
99 However, in my view, the reality is different. Greyhound’s evidence was that owner-operators, including Lefler and Kummer, do not have to perform the work themselves, its main concern being whether the services are being provided. The owner-operators pay for the replacement drivers, their benefits or WCB. Lefler had a relief driver for six months in the beginning of 1998. The relief driver, apparently his cousin, was employed by Lefler and Greyhound did not object. If case of illness and vacation time, the owner-operators are responsible to provide relief. Greyhound’s evidence that holidays are purely within the owner-operators’ discretion: they do not book or schedule holidays with Greyhound. Ho said that he has two relief drivers, trained and supervised by him, for when he is unable to work himself. His company, 3H, pays for these employees and he did not get Greyhound’s approval or permission to hire them. Ho further testified that the last time he operated his van was in September of 1998. In 1997, he took 50 weeks off to attend to another business he was involved with, and — during that time — his truck was operated by his relief drivers. He agrees that he talked to Greyhound about this and had its permission. Grewal also uses relief drivers, paid for, hired, trained and supervised by himself. He explained that he uses relief drivers regularly to bring the truck in to the terminal in the evening and to allow him to take Fridays off. He has not worked Fridays for the last four to five years. I accept, that owner-operators are not required to perform personally the services. In my view, this points in the direction of an independent contractor status.
100 In Ajax/Pickering, above, the Ontario Labour Relations Board held that delivery drivers were independent contractors under the Ontario Labour Relations Act (which includes a definition of dependent contractor). In that case the Board noted that “at first blush” the relationship tended to establish that the drivers were dependent contractors. The alleged employer controlled “what is to be delivered and when and where it is to be delivered” (page 5). On the totality of the evidence, the alleged employer was, however, only concerned that the proper number of items were delivered to certain locations by a specified period of time and there was “little evidence that <it> exercises any further control about how the drivers perform the work” (page 5). The drivers were not required to notify the alleged employer of absences. The Board further noted the drivers engaged “helpers” or “substitutes” paid for by them and stated (at page 7-8):
We have determined that on balance the factor which focuses on the use of, or the right to use, substitutes points towards independence in the circumstances before us. As the jurisprudence repeatedly notes it has generally been considered inconsistent with an employment relationship if a contractor is able to fulfil the agreement with someone else’s labour rather than the contractor’s own work and skill. The fact that some of the drivers regularly use others to perform all or significant portions of their obligations under the agreement … is a factor which strongly points towards independent contractor status.
101 In other jurisdictions, such as British Columbia, it is not necessarily considered inconsistent with “dependent contractor” status under the Labour Relations Code to employ others (see, for example, West Fraser Mills Ltd. v. IWA-Canada, Local 1-425 (1993), 93 C.L.L.C. 16,044 (B.C. L.R.B.) , BCLRB No. B97/93 (upheld, in part, on reconsideration BCLRB No. B442/93 [(1993), 21 C.L.R.B.R. (2d) 236 (B.C. L.R.B.)])). However, a person “ho does not regularly drive a truck himself, would not come within the scope of the ‘dependent contractor’ provision because he does not ‘perform work or services’ in a manner analogous to an employee” (I.B.T., Local 213 v. Fownes Construction Co. [[1974] 1 Canadian L.R.B.R. 510], BCLRB No. 116/74, upheld on reconsideration in BCLRB No. 133/74). It is important to keep in mind that these cases were decided under a legislative scheme which, like part I of the Code, expressly provides for “dependent contractors”.
102 In the circumstances of this case, I am of the view that Lefler and Kummer are not employees.
103 In view of my conclusion that Lefler and Kummer are not “employees” for the purposes of Part III, I need not deal with the issue of the deductions.
Order
104 I order that the decision dated May 28, 1997, and payment order issued on July 17, 1997 be set aside and all funds paid by Greyhound be returned to it.