Contract job workers left without hope

"We had a waitress come in who said she was told she was not an employee; she was an independent contractor with a waitressing business."…There is no single definition of "employee" in Canada. Courts and tribunals often use the four-fold test to set out employee versus independent contractor or self-employed status.

The Toronto Star
March 10, 2007

Contract job workers left without hope
Rita Daly

A pizza deliveryman is told he is a "contract driver," not an employee, then his franchise boss assigns him to work 10 hours straight with no overtime pay.

A home-care worker, on 24-hour shifts looking after a man with Alzheimer's disease, signs a contract with a temp agency saying she is "self-employed" and therefore not entitled to the minimum wage.

And then there's Boen Hauw Tjoa. His brief experience as a "subcontractor" hired to mop floors and dust offices caused so much distress, it shattered his trust in others.

Tjoa, and other workers as he would later discover, all signed an independent contract with the licensee of a commercial cleaning company called Countrywide. He paid thousands of dollars in upfront fees in order to get work, then was told where and when to clean and ordered to buy hundreds of dollars in supplies from the Toronto-area company.

Ten months after signing his contract, Tjoa, 44, who came from Indonesia in 2004, has lost more than $3,000 – his entire savings – after working for what amounted to less than $6 an hour. He has no cleaning business. And the company is still recruiting workers in employment ads to "Be Your Own Boss."

Contractor. Subcontractor. Independent owner. Self-employer. Franchisee. Under these and other job arrangements, many low-pay Ontario workers in the service sector – mainly women, recent immigrants and visible minorities – are being denied minimum wages and other basic employment rights by employers evading labour-protection laws.

Under the province's Employment Standards Act, minimum standards protect an employee's rights: statutory holidays, overtime pay, minimum wage, vacation pay, work breaks, termination pay. The catch is, you have to be deemed an "employee."

At the end of the working day, the wages of many so-called self-employed or contract workers can amount to as little as $4 an hour, half the legal minimum in Ontario.

"We've seen this taken to ludicrous extremes," said Elizabeth Bruckman, a lawyer for Parkdale Community Legal Services in Toronto. "We had a waitress come in who said she was told she was not an employee; she was an independent contractor with a waitressing business."

Hot on the heels of a movement to raise the minimum wage to $10 from $8 an hour, workers' rights advocates, community legal workers and labour unions are mounting a parallel campaign urging the Liberal government to crack down on unscrupulous employers.

They want more workplace inspections. And they are urging reforms to labour-standards laws to protect all low-wage workers.

Parkdale Community Legal Services and the Workers' Action Centre, a worker-based organization, have joined forces to demand the province also get tough on repeat offenders who underpay workers and charge questionable fees, and employers who misclassify low-pay workers as self-employed or independent.

Labour Ministry spokesperson Belinda Sutton said the Liberal government has beefed up inspections substantially since taking office, from 151 inspections in 2003-2004 to more than 2,500 in 2005-2006. It has prosecuted more than 1,000 employers since 2004.
But with 350,000 employers in Ontario, the chance of getting inspected is still less than 1 per cent.

There are 129 employment standards officers, but ministry officials acknowledge more time is spent chasing the 15,000 to 20,000 annual complaints from workers than inspecting businesses suspected of breaking the rules.

Last year the provincial labour ministry received 16,000 complaints that represented $35 million in unpaid wages. About 450 employers were prosecuted for violations last year, said Sutton. Only three were fined $3,000 or more. The rest were ticketed for $360.

A $10 minimum wage won't mean much to workers whose employers aren't forced to abide by existing laws, warns Mary Gellatly, a community legal worker at Parkdale legal services.

"The most disturbing part of this (self-employed) trend is big and small companies alike are passing on the risk and cost of doing business onto the lowest-paid workers," she said.

Tjoa, a full-time welder for an auto-parts firm, got involved last April with Countrywide, a Mississauga-based company. He was looking for a second job to save enough money for his 18-year-old son's university education.

He met with the licensee, also an independent contractor but on a higher level, who persuaded Tjoa to pay $3,000 in upfront fees and sign a contract promising $1,000 a month worth of cleaning work. "I thought the cleaning would be the perfect job. I had my welding job in the daytime and the cleaning job after hours," Tjoa said in an interview in his west Toronto apartment where he lives with his wife, Henny Sung, and their two sons.

For two months, he received no jobs. Then in June, he received a call to come in for training – and watched an hour-long video on how to clean and dust offices. He heard nothing again for weeks.

Frustrated and worried, he made repeated phone calls to the licensee and was finally assigned a job cleaning a fitness centre every Saturday, a contract worth only $150 a month.

He was then told he needed to buy $290 worth of cleaning supplies from Countrywide before he could start.

Tjoa eventually got two more contracts, cleaning warehouses. But the three jobs altogether paid only $460 a month, nowhere near the $1,000 monthly he had been promised.

Worse, the jobs were labour-intensive, forcing him to solicit the help of his wife and teenage son.

Calculating all the hours they put in, Parkdale's Gellatly says the three each earned less than $6 an hour.

Tjoa kept working for several months because he didn't want to break the contract and give up on his $3,000 investment. When he tried to complain, the licensee had disappeared.

The head office of Countrywide told him, as they told the Toronto Star, that every Countrywide licensee and cleaner runs an independent business. President Thomas Morrissey said his office bears no responsibility to the workers.

"All these guys (licensees) are presidents or directors of their own company. We just do the administration," he said.

And the cleaners? "So long as they're given their job, it's their responsibility to see it's done properly. There's no supervision. They do their own thing."

"I have nothing to do with the workers."

Morrissey's advice to Tjoa: "Go to small claims court."

Four fold test
There is no single definition of "employee" in Canada. Courts and tribunals often use the four-fold test to set out employee versus independent contractor or self-employed status.

The test consists of the following four factors:

Control – The more control exerted by the company, the more likely the finding of an employment relationship. Who sets the hours of work? Is the worker told where to work or how the work is to be done?

Ownership of Tools – If individuals purchase, own and use their own tools, vehicle, etc. they are more likely to be considered independent contractors.

Chance of Profit – Does the individual have any chance of benefiting from the success of the business?

Risk of Loss – Does the worker have any risk if the business is unsuccessful?

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