Brent’s Company Worked Solely for a Lumberyard. Work Was Assigned, Not Offered. After 14 Years, the Relationship Was Terminated
Some people are employees. Some people are independent contractors. Some people are somewhere in the middle. They are called dependent contractors, and if there is no written agreement with some sort of termination clause, they are entitled to reasonable notice of the termination of the relationship, just like an employee.
Brent owned three trucks through his incorporated company. He was the sole shareholder and director. For 14 years Brent’s company worked solely for a local lumberyard. He had no other customers. He delivered the company’s product to its customers.
Brent worked full-time hours, Monday to Friday, and it was not open to him to turn down work from the lumberyard. The employer insisted Brent have professionally installed decals on his trucks with the lumberyard name on them. They were not magnetic and could not easily be removed if Brent had the time to work for anyone else.
The lumberyard assigned Brent and his two employees work, it was not offered. It set the time the trucks had to show up at the yard every morning. It told them when, where and how the products were to be delivered. They had to keep in touch with the shipping department throughout the work day. They even let Brent participate in their employee benefits program for a while. Brent and his drivers had to have software on their phones that connected to the employer. They had to leave their trucks at the yard to be loaded for the next day. They had to submit vacation requests. Like the employees, they were required to attend safety meetings. On occasion, the shipping manager disciplined, suspended and even terminated Brent’s drivers.
Brent was responsible for all the costs and maintenance of his three trucks. Brent’s trucks and drivers were charged to the lumberyard on an hourly basis. Brent got paid whether or not the customer paid, based on the hours he and his employees worked. There was some risk for profit or loss for Brent, but not much.
Brent’s services were an integral part of the lumberyard’s business, essential to its activity of selling construction supplies.
After 14 years, management told Brent he should start looking for work elsewhere as things were slowing down. Soon after, it provided him a letter terminating the relationship. Brent’s company sued the lumberyard for lack of reasonable notice of the termination of the relationship. Its position was that given the absence of a written contract with a termination clause and a very dependent 14-year relationship, it should have received 16 months’ notice of the termination.
Ultimately, the judge decided that Brent’s company was a dependent contractor. The fact that he filed the company’s tax returns for 14 years as an independent company was neither here nor there. What mattered was the big picture. While some aspects of the relationship between Brent’s company and the lumberyard had the smell of him being a truly independent contractor, most smelled the opposite. The judge found that Brent’s company was a dependent, rather than independent, contractor, and in all the circumstances Brent should have been given 10 months’ notice of the termination of the relationship.
The judge looked at the last six months of revenue Brent’s company earned and reduced it by the money Brent earned in that 10-month period from new work. Ultimately, he was awarded $83,000 and most of the costs of his lawyer.
In this case, if the lumberyard had had Brent sign an indefinite contract with a 30-day termination clause, or even a one-week termination clause, this case would never have happened. Its failure to keep its paperwork in order was costly.
This article was originally published by The Hamilton Spectator.
