In Ursic v. Country Lumber Ltd., 2025 BCSC 970, the British Columbia Supreme Court (the “Supreme Court”) examined an employer’s obligations towards a dependent contractor upon termination without cause. In general, a way of viewing independent contractor versus employee classifications is that the two classifications are on opposite ends of a spectrum. Sometimes a working relationship is somewhere in between, which is a classification called a dependent contractor. A dependent contractor is neither an ‘employee’ nor an independent contractor. Instead, a dependent contractor may have factors whereby the worker was economically dependent on the employer and derived a large majority of the worker’s income from the employer, or the employer had a high degree of control of the worker, amongst other factors. The Supreme Court emphasized that a lower notice period should not automatically be applied to dependent contractors.
Background
In this case, the plaintiff provided trucking delivery services to the defendant for 14 years before the defendant terminated the plaintiff’s services without notice. The plaintiff owned and operated his own businesses involving commercial trucks in Alberta and British Columbia. The defendant sold construction materials to a variety of construction and building clients. The defendant contracted with “owner-operators” who provide trucking services to the defendant. The plaintiff worked exclusively for the defendant for 14 years by providing his company’s trucks. The parties did not have a written contract. The defendant terminated the relationship with the plaintiff and did not allege a cause for the termination. Amongst the issues raised, the plaintiff raised that it was economically dependent on the defendant, as all of the plaintiff’s revenue over the previous 14 years was directly attributable to work performed for the defendant.
Issues
The Supreme Court considered the following primary issues:
- whether the plaintiff was a dependent contractor rather than an independent contractor;
- if the plaintiff was a dependent contractor, what was a reasonable notice period (or damages in lieu of notice) on termination; and
- whether the plaintiff discharged its duty to mitigate, and what was the plaintiff’s mitigation earnings.
Findings
The Supreme Court determined the true nature of the parties’ working relationship and found the plaintiff was a dependent contractor. The Supreme Court also found that dependent contractors are not entitled to the same amount of notice of termination as an employee; however, the entitlements that a dependent contractor may receive may still be significant. The Supreme Court held that the notice period of a dependent contractor should reflect where a relationship falls on the continuum between employee and independent contractor. The Supreme Court found that the plaintiff (as a dependent contractor) was entitled to damages equal to the value of the contract over 10 months, less any amounts that were earned during this period in mitigation.
Key Takeaways
This case is an important reminder for employers and workers to have a written contract with enforceable without cause termination provisions and that ‘dependent contractors’ are a recognized category separate from employees and independent contractors. If the parties do not have a written contract, then the Court will be required to assess the working relationship based on the subsequent conduct and practices of the defendant. The defendant’s past practice assists in determining the meaning of the terms of the contract and whether the individual in question was an employee, independent contractor or a dependent contractor and the entitlements, such as common law reasonable notice (or damages in lieu of notice) that arise from termination without cause.
If you have any questions about termination procedures or other workplace issues, please reach out to Tiffany Lee at [email protected].
