Highlights of Noteworthy Decisions

Decision 1794 12
E. Smith
  • Collective agreement
  • Corporation (piercing corporate veil)
  • Executive officers
  • Independent operator (construction)
  • Right to sue
  • Worker (test)

The defendants in a civil case applied to determine whether the plaintiff's right of action was taken away.

The plaintiff was an executive officer and sole shareholder of a company that was subcontracted by a framing contractor to do framing work at a construction site. The plaintiff was injured while working at the site. The issue was whether the plaintiff was an executive officer, independent operator, employer or worker.
The plaintiff was an executive officer of his corporation and he did not have personal coverage. The Vice-Chair noted that Board policy effective January 2013, provides that compulsory coverage is extended to independent operators, sole proprietors, partners and executive officers in the construction industry, with certain exceptions. Those persons are deemed to be workers. However, that policy was not in effect at the time of the accident in 2008, and could not be applied retroactively.
The incorporation of the plaintiff's company was not a sham. He incorporated in 1984, many years before the accident. He had employees for many years, and had two employees working for him on the particular project at the time of the accident. The contractor paid the plaintiff's company for work done and the plaintiff's company paid its employees. The company withheld payroll deductions and paid WSIB premiums for those employees. The plaintiff was also not a dependent contractor, as the Vice-Chair noted that a dependent contractor is only a worker when the principal contractor pays the WSIB premiums.
The plaintiff's business was operating as an independent business. The plaintiff was the directing mind of the business.
The fact that the plaintiff was working with tools together with his employees did not mean that he was a worker for purposes of the WSIA. It is common in small or one-man companies, for the principal of the company to engage in the work of the company himself. Sections 11 and 12 of the WSIA, which provided that an executive officer was not subject to mandatory coverage, did not contemplate that a person's status would change from hour to hour or day to day depending on the work that was being done. Working with tools is a factor for consideration but is not determinative.
Incorporation is often important evidence of independence. Union membership is often important evidence of worker status. However, neither is determinative.
A person cannot have the status of a worker and an employer at the same time with respect to the same work. The defendants submitted that the definition of worker in s. 2, which included a person who has entered or is employed under a contract of service, could refer to either a worker or an employer. However, the Vice-Chair did not accept that submission. The Act cannot be read to mean that a sole proprietor or partner who hires workers will be subject to mandatory coverage as a worker and, at the same time, be required to apply for coverage. Such an interpretation would lead to an absurd result.
The Vice-Chair concluded that the plaintiff was an executive officer and not a worker. The Vice-Chair further concluded that this was not a case in which to pierce the corporate veil. The plaintiff had personal coverage in the 1980s, but changed to private insurance in 1990. There was no evidence of bad faith when he did so.
Principal contractors rely on clearance certificates to protect themselves from liability for premiums owned by subcontractors. However, a clearance certificate is not a "firewall" of protection. The clearance certificates did not address whether there were persons working for the subcontractor who were not required to have mandatory coverage and who, therefore, were not covered by the clearance certificates.
Pursuant to collective agreement, the plaintiff was required to obtain WSIB coverage. The plaintiff did not comply with the collective agreement in this respect. However, the Vice-Chair did not have the jurisdiction to address that breach by determining that the plaintiff was a worker.
The plaintiff was an executive officer, not a worker. He was not subject to mandatory coverage and did not obtain personal coverage. His right of action was not taken away.