Can Partners Ever Be Employees? The McCormick Decision

In its unanimous decision in McKormick v. Fasken Martineau Dumoulin LLP1, released in May 2014, the Supreme Court of Canada decided that an equity partner in a B.C. law firm was not an "employee" within the meaning of the British Columbia Human Rights Code. The case is significant to professionals operating in "partnership" across the country.

McCormick had filed a complaint alleging that his firm's mandatory retirement policy contravened Human Rights legislation. Similar to the legislation in other provinces, the B.C. Code prohibits discrimination in "employment" on a number of prohibited grounds, including "age". The issue was whether McCormick was an "employee" and therefore afforded the protections of the Code.

The British Columbia Court of Appeal had found that McCormick's "status" as a "partner" of his firm, alone, was enough to substantiate a finding that he was not an "employee". The Supreme Court did not agree, finding that the legal form of the parties' relationship is not determinative, and preferring to apply a "control" and "dependency" test. According to the Court, the applicable question is "who is responsible for determining working conditions and financial benefits and to what extent does the worker have an influential say in those determinations?" The degree of control and resulting dependency will determine whether the individual is an employee or not.

The Court found that McCormick was operating in a common enterprise with his partners and that "far from being subject to the control of Fasken, McCormick was among the partners who controlled it". In support of this finding, the Court emphasized:

McCormick's "equity" partnership and related voting rights McCormick's compensation from the firm's profits The setting of McCormick's compensation by a committee of his partners...