Your Partners Are Not Your Employees: Supreme Court Of Canada Clarifies The Application Of The Control/Dependency Test

In 2009, John McCormick, an equity partner in the law firm Fasken Martineau DuMoulin LLP (the "Firm") filed a complaint with the British Columbia Human Rights Tribunal, alleging the Firm's requirement that equity partners retire from the partnership and divest their equity at age 65 was age discrimination in employment, contrary to section 13 of the British Columbia Human Rights Code, R.S.B.C. 1996, c. 210 (the "Code").

The Firm applied to have the complaint dismissed on the basis that the matter was not within the jurisdiction of the tribunal, and that there was no prospect that the complaint would succeed. The Firm's primary position was that because Mr. McCormick was an equity partner in the firm, there was no employment relationship that could be the subject of a complaint under section 13 of the Code. The Tribunal denied the Firm's application to dismiss however, and concluded that the relationship between Mr. McCormick and the Firm was one of "employment" for the purposes of the Code.

On judicial review, Justice Bruce of the Supreme Court of British Columbia agreed with the Tribunal, indicating that the application of the Code must be based on a conclusion that the complainant and the alleged offender are in an employment relationship in fact and in substance. In Mr. McCormick's case, many of the attributes of his relationship with the Firm were the same as those found in a traditional employer/employee relationship and therefore the Tribunal's decision to deny the Firm's application to dismiss was justified.

The Court of Appeal disagreed however, and held that despite the broad, liberal and purposive interpretation that must be given to the Code, it is a legal impossibility for a partner to be employed by the partnership of which he or she is a member. The fact that the Firm's management may exercise similar aspects of control over the partners as may be exercised by the management of a corporation over its employees does not change the relationship from one of partners running a business to one of employment by one group of partners over an individual partner. Accordingly, in a unanimous decision the Court of Appeal determined that there was no employment relationship, so the complaint should be dismissed. Mr. McCormick was subsequently granted leave to appeal this decision of the Court of Appeal to the Supreme Court of Canada.

On May 22, 2014 the Supreme Court of Canada released its highly anticipated decision dismissing Mr...