SCC says equity partner of law firm is not an employee pursuant to Human Rights Code of BC

  • McCormick became an equity partner at his law firm in 1979.
  • In the 1980s, the equity partners at FMD voted to adopt a clause in their Partnership Agreement that required equity partners to retire as equity partners and divest their ownership shares at the end of the year in which they turned 65.
  • McCormick brought a complaint to the Human Rights Tribunal arguing that this provision was age discrimination in employment and prohibited by the Human Rights Code, R.S.B.C. 1996, c. 210 (“Code”).
  • FMD applied to have the complaint dismissed on the grounds that McCormick was not an employee pursuant to the Code.

Findings below:

  • The Tribunal concluded that there was an employment relationship.
  • The law firm’s application for judicial review was dismissed by the B.C. Supreme Court.
  • The BC Court of Appeal allowed the appeal, concluding that McCormick, as a partner, was not in an employee pursuant to the Code.

SCC:

  • “Deciding who is in an employment relationship for purposes of the Code means, in essence, examining how two synergetic aspects function in an employment relationship: control exercised by an employer over working conditions and remuneration, and corresponding dependency on the part of a worker. In other words, the test is who is responsible for determining working conditions and financial benefits and to what extent does a worker have an influential say in those determinations? The more the work life of individuals is controlled, the greater their dependency and, consequently, their economic, social and psychological vulnerability in the workplace” [paragraph 23, emphasis mine]
  • “Control and dependency, in other words, are a function not only of whether the worker receives immediate direction from, or is affected by the decisions of others, but also whether he or she has the ability to influence decisions that critically affect his or her working life. The answers to these questions represent the compass for determining the true nature of the relationship” [paragraph 27]
  • “Among the distinctive features of a partnership is that partners generally have a right to participate meaningfully in the decision-making process that determines their workplace conditions and remuneration” [paragraph 31]
  • “Turning to Mr. McCormick’s relationship with his partnership and applying the control/dependency test, based on his ownership, sharing of profits and losses, and the right to participate in management, I see him more as someone in control of, rather than subject to, decisions about workplace conditions.  As an equity partner, he was part of the group that controlled the partnership, not a person vulnerable to its control” [paragraph 39]
  • This is not to say that a partner in a firm can never be an employee under the Code, but such a finding would only be justified in a situation quite different from this case, one where the powers, rights and protections normally associated with a partnership were greatly diminished” [paragraph 46, emphasis mine]

There a number of employment lawyers getting hot and bothered about the precedential value of this case.  I am not one of them.  The case contains some interesting and useful comments regarding the test for determining whether an individual is an employee for the purpose of human rights complaints (control/dependency). However, this case does not stand for the proposition that no partner can ever be an employee.  It is a very fact-specific analysis of a particular individual’s partnership.  

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