Canada: Class action lawsuits over alleged misclassification of employees as independent contractors are increasing, say lawyers

Author: Barry Kuretzky & Rhonda B. Levy, Littler, Published on: 21 March 2019

"Ontario, Canada Companies Beware: Class Action Lawsuits Alleging Worker Misclassification Are on the Rise", 4 Mar 2019

It appears there is a movement afoot in Ontario to change behavior around the classification of employees as independent contractors.  Beginning in 2015, we began to see a number of class action lawsuits that allege misclassification and claim significant monetary liability. They include claims for employee entitlements under the Employment Standards Act, 2000 (ESA), including minimum wage, overtime pay, vacation pay, public holiday pay, and premium pay; claims for Canada Pension Plan and Employment Insurance contributions owed to employees; claims for adverse tax consequences sustained by employees as a result of the alleged misclassification; and claims for general, punitive, aggravated, and exemplary damages...

The jurisprudence in these cases has not yet developed beyond the legal issues to be decided at the certification stage.  If the courts find in favour of the plaintiffs when the substantive issues are finally litigated, employers that are misclassifying employees as independent contractors could be vulnerable to significant financial liability...

The class action proceedings in Ontario alleging the misclassification of employees as independent contractors suggest that it is not just start-up and gig economy employees who are alleging misclassification.  The lawsuits indicate that established companies with significant workforces are not immune to such claims...

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