Photo by Michael Chrisman from the Torontoist Flickr Pool.
Further to last week’s post about a CFRB/zig advertising campaign paying homeless people to carry signs asking, “Should panhandling be illegal?” we received a comment attributed to Ben Rogovy, founder of US-based Bumvertising. Of the “bums,” Rogovy said that “our advertisers are hired as independent contractors. We don’t require them to work fixed hours, therefore we don’t pay minimum wage.”
Ethical issues aside, we thought that we’d delve into the legality of that statement. Can you pay people less than minimum wage to carry your signs? Our tentative answer is that, in Ontario, you probably can’t.
The Employment Standards Act requires employers to pay employees a minimum hourly wage. Regulation 285/01 sets this amount at $8.75 per hour, rising to $9.50 on March 31, 2009, and $10.25 on March 31, 2010.
Not all employees qualify: exemptions include work experience students, prison inmates, elected officials, directors of corporations, members and students of certain qualified or registered professions (like law, massage therapy, and teaching), commercial fishers, and travelling salespeople. A different minimum wage exists for students under 18, liquor servers, hunting and fishing guides, and homeworkers. And for all you camp counsellors and farm workers out there, note that room and board count toward wages.
And there’s another—big—catch. To qualify for minimum wage, you have to be an “employee.” Sound obvious? It isn’t.
Some workers are classified not as employees but as “independent contractors,” these being self-employed people who enter into business-to-business arrangements with people who pay for their services. As a general rule, employees get more employment protections (minimum wage, overtime, holidays, and so on) but fewer tax benefits, while independent contractors have it the other way around.
Don’t be discouraged if you aren’t sure where to draw the line. It’s one of the most hotly contested questions in employment law, as a worker’s status affects the outcome of everything from a worker’s level of personal income tax to the liability of a payer for a worker’s negligence.
Photo by Torontogal Photos from the Torontoist Flickr Pool.
The Supreme Court considered this issue in the 2001 case of 671122 Ontario v Sagaz. It held that “the central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account.” It went on to identify a (non-exhaustive) list of relevant factors: “the level of control the employer has over the worker’s activities … whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.”
The Federal Court of Appeal—one level down from the Supreme Court, but still influential—also considered this issue in the 2006 case of Royal Winnipeg Ballet v MNR. While acknowledging the Supreme Court’s prior decision—not that it had any choice—it divided on whether to count the parties’ intentions as a relevant factor. Two judges concluded that the common intention of the parties to classify their relationship one way or the other should carry some weight; the third judge concluded that intention was less relevant and could even be a misleading description of the actual facts on the ground.
If you don’t feel like reading the cases, the Canada Revenue Agency’s guidelines provide a quick and dirty summary of the main issues.
Getting back to our original question, are sign-holders employees or independent contractors?
Several factors point to an employment relationship. There seems to be a high degree of control, at least on the part of Bumvertising, which appears to direct, scrutinize, and control the activities of its workers. The payer provides the key tool—the advertising sign—that the workers use. It is also unclear that the workers are taking any financial risks in the course of their work: as long as they do what they are told to do—hold the sign—they get paid. Finally, it is questionable whether the work involves a high degree of investment or management on the part of the workers.
Could the opposite be argued? One could stretch the definition of “business” (to a perhaps unreasonable degree) in order to include panhandling, and thereby argue that each worker is “a person in business on his or her account” who contracts with agencies for the performance of certain services. One could also suggest that—more in the case of CFRB/zig than Bumvertising—workers are being hired for a very specific job that needs to be done, and that neither party ever intended to form any sort of relationship resembling employment.
But on balance, we’d be inclined to think that the sign-holders are employees. Their employment may be temporary and casual, but that’s not really relevant. If anything, temporary and casual workers, particularly those under duress, are those most in need of the protection of minimum wage laws. And while law perhaps shouldn’t be governed by emotions, one can’t help but feel that the setup seems less like hiring other businesspeople to get a job done and more like taking advantage of vulnerable people in order to obtain cheap labour.
In any event, the earlier comment is simply wrong to declare that the only relevant factor is whether workers have fixed hours. We don’t know how much CFRB/zig paid homeless people to hold their signs—they wouldn’t tell us, NOW, or the Post—but it would be interesting to know whether they borrowed Bumvertising’s pay structure as well as its business model.