Date: 20010419
Dockets: 2000-729-EI,
2000-2833-EI
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.,
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Dockets: 2000-730-CPP,
2000-2834-CPP
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.,
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor Judgment
Rip, J.T.C.C.
[1] These are appeals from an assessment dated January 17, 2000 and determinations by the respondent dated December 9, 1999 that, with respect to the assessment, Peter Cole, Steven Kohuch, Sean Miller, Chris Rankin, Gavin Rankin, Gerald Schulz, Evan Titchkosky and Hospacia Vissarra and, with respect to the determination, Peter Marschall, were employed by the appellant under contracts of service during various periods in 1999 and were therefore employees of the appellant employed in pensionable and insurable employment pursuant to the Canada Pension Plan ("Plan") and the Employment Insurance Act ("Act") respectively and, therefore, the appellant is liable for contributions as an employer under the Plan and for premiums as an employer under the Act. The appeals with respect to Mr. Marschall relate to whether he was an employee of the appellant and was engaged by the appellant in pensionable and insurable employment during the period of May 5, 1999 to July 26, 1999.
[2] The appellant, operating under the name "Accurate Alarm", is a corporation carrying on the business of selling and installing commercial and residential security alarm systems to customers at various locations in Manitoba. Mr. Lawrence Rosenberg, General Manager and President of the appellant, stated that in 1999 the appellant installed 70 to 100 systems each month.
[3] Typically, when a customer asks for an estimate a salesman will visit the site and quote an estimate based on the type of equipment required and time. An hourly rate is based on a formula of how long an installation will take. The appellant engages workers to install the systems. These workers, the installers, are the people whose status is to be decided in these appeals.
[4] The installers, sometimes referred to by Mr. Rosenberg as subcontractors, learn of the availability of work with the appellant by word of mouth or leave their names at the appellant's suppliers. The appellant also advertises for workers in local newspapers. No license is required to work in Manitoba as an installer.
[5] The appellant's practice was that Mr. Rosenberg or some other employee discuss with a prospective worker the work to be performed. Mr. Rosenberg declared a worker is free to work elsewhere and may work for the appellant for as many or as few hours as he wishes. The installers supply their own vehicule to travel to and from an installation site. There is no Accurate Alarm signage on the vehicule. The appellant paid an installer a mileage allowance for work outside of Winnipeg. The worker uses his own tools. The appellant, when required, will make available a specialized tool used in about one per cent of the installations and a long extension ladder.
[6] The prospective worker negotiates the pay for his services, said Mr. Rosenberg. Mr. Rosenberg stated that the worker is told no statutory deductions will be withheld from his pay. The installer is paid at an hourly rate. Mr. Rosenberg denied he dictated the hours and rates of pay to the workers.
[7] If an installer was inexperienced, Mr. Rosenberg explained, the appellant would "couple" the new installer with an employee[1] or an experienced installer to "learn our philosophy". The "philosophy" includes the method the appellant uses to route wiring, to soder wire connectors and to perform other tasks. In this case the experienced installer will be paid an additional amount.
[8] Installers are asked to have a "neat" appearance. There is no uniform, Mr. Rosenberg declared.
[9] Mr. Rosenberg stated that installers advise the appellant in advance the days and times they wish to work. The appellant's "client project coordinator" matches the installer to scheduled installations; the installers may refuse jobs, said Mr. Rosenberg.
[10] A typical day for an installer starts when he or a helper attends at the appellant's location to pick up from a bin material needed for a scheduled installation. There is no "sign-in procedure", Mr. Rosenberg emphasized. Nor is there a procedure where the installer is to check in with the appellant during the day. Other than a description of the work to be done, the appellant gives no instructions to the worker. The worker has discretion to improve the installation indicated and if there is a cost differential, the worker is to call the appellant for its approval and that of the customer.
[11] The appellant does not pay an installer any extra if he hires a helper on his own account.
[12] The appellant does not verify the work of an installer unless a customer reports a problem. The appellant has several warranty arrangements available to a customer; the basic warranty is for one year on labour and parts. If the installation is deficient, the installer must correct the deficiency on his own time and at his own expense. If the problem is with the equipment or parts, the appellant reimburses the installer for his time and cost, if any.
[13] Where a system is installed in a home under construction, the installer may work at the site when he wishes since no appointment has been made. Most of the work in a new home is done before the drywall is installed.
[14] Installers are to keep track of their hours and invoice the appellant every two weeks, according to Mr. Rosenberg. The appellant supplies the installer with blank invoices to complete and return to the appellant. The appellant decided to supply invoices to the workers since previously its workers provided invoices on paper napkins and other paper. A blank invoice is placed in the installer's bin at the appellant's office every two weeks. The appellant would have usually received an invoice, presumably handwritten, from the installer. The new invoice is a "replication" of the previous invoice. The appellant retains the original.
[15] The information on the invoice produced at trial is written in type and describes the days, dates and hours for that day that the installer worked, and a subtotal of hours for the two-week period. Some installers, Mr. Rosenberg stated, submitted computer generated invoices. The invoice produced at trial does not state the amount owed to the installer, although it confirms the name and address of the installer; Mr. Rosenberg could not explain this omission.
[16] Mr. Rosenberg declared that the appellant does have installers who are employees; their salary is not dependent on hours worked and is subject to statutory withholdings. Employees also have medical benefits. Messrs. Peter Cole and Gavin Rankin, explained Mr. Rosenberg, were subcontractors who became employees in 1999.
[17] Employees who work for the appellant, Mr. Rosenberg testified, "are always working for us" and do not choose when they want to work.
[18] Mr. Rosenberg explained that as the appellant "grew", it wanted employees. In 1999 the appellant had 15 employees including a receptionist, controller, administrator, project coordinator, installation manager (who deals with customers and technical installation problems) and sales representatives. He also discussed the work of several of the workers where status is under review in these appeals. He said he did not initially interview Mr. Marschall and spoke to him only casually. Mr. Marschall left the appellant after several weeks as an installer, according to Mr. Rosenberg, because he could not live on what he was earning from the appellant.
[19] Two-way radios are supplied to installers at new homes in case they require help, not to keep in touch with the appellant as to a job's progress, said Mr. Rosenberg. Pagers are supplied to installers who are employees and only "sometimes" to subcontractors. Pagers were given to Peter Cole, Gavin Rankin, Gerald Schulz and Chris Rankin before they became employees.
[20] Installers who were employees did the same work as before they were employees, but were assigned more complex jobs, Mr. Rosenberg testified. Messrs. Cole and Schulz, as employees, also made service calls and would talk to clients by telephone. Previously, Mr. Rosenberg and the project coordinator would deal with clients by telephone. Mr. Schulz also helped prepare work orders, when necessary.
[21] One of the workers, Guy Boiteau, was once paid a "flat rate" to install a security system. Mr. Rosenberg described payment "by the job" an expensive way to pay a subcontractor but is "sometimes done". On other installations, it appears, Mr. Boiteau was paid on an hourly basis.
[22] Finally, Mr. Rosenberg denied under cross-examination that the appellant had to approve the employment of a helper by an installer or that a worker could not refuse a job. He explained installers could trade jobs "but we try to give them a logical order". He also denied a worker could not take time off to do some other job. The appellant distributed a company "T-Shirt" as a promotional item, not as a uniform, Mr. Rosenberg insisted.
[23] Messrs. Schulz, Marschall and Vissarra also testified, Mr. Schulz for the appellant and the latter two gentlemen for the respondent. Mr. Schulz, an employee of the appellant at time of trial, corroborated much of Mr. Rosenberg's evidence.
[24] Mr. Schulz had 20 years experience in the security system industry, although he had no formal training in electronics. When he was "let go" by his former employer he applied to the appellant for work and was interviewed by Mr. Rosenberg. He said he "negotiated" an hourly rate of pay to work as a contract installer. Carrying on business under the name of GDS Technical Services, Mr. Schulz also installed systems for his own account while working for the appellant as a subcontractor. There is no evidence that Mr. Schulz billed the appellant in the name of GDS Technical Services; indeed, the inference is that he did not. If he truly was an independent contractor dealing with the appellant, one may reasonably conclude that he would have billed through GDS Technical Services.
[25] At their interview, Mr. Schulz told Mr. Rosenberg what days he was available to work and Mr. Rosenberg "gave me work [for] those times". He could have refused work, Mr. Schulz recalled, but never did.
[26] Although there was no requirement to "check in" with the appellant, Mr. Schulz picked up the material from his bin at "about 8:30" each morning. He used his own vehicule to travel to customers and was not reimbursed for travel expenses. Mr. Schulz used his own tools which, he said, had a value of between $2,000 and $3,000. If a tool broke, he absorbed the cost of a replacement.
[27] Different jobs took different times to complete, Mr. Schulz recalled, and if he completed all his assigned work for the day, he "would call in" for more work or go home. The appellant provided Mr. Schulz with a two-way radio in case of "emergency" or to contact the appellant if a customer told him to do different work than that assigned by the appellant. Both before and after he became an employee, Mr. Schulz used a pager for the "office to get in touch with me in case of an emergency service call". As an employee he was required to have a pager.
[28] At his first "one or two jobs ... somebody came by to see if I knew what I was doing", Mr. Schulz testified. If he thought a cable should run a route different than that agreed to by the sales representative and the customer, and additional cost was involved, he would telephone the appellant for approval. He agreed that if his work was deficient, he would have to correct the deficiency on his time and at his own cost.
[29] Mr. Schulz invoiced the appellant every two weeks. He would obtain a "blank sheet of paper" and enter the hours and dates worked. He usually worked four to six hours a day, but sometimes as many as 16 hours.
[30] Mr. Schulz reported his income on his tax returns on the basis he was an independent contractor. He became an employee on March 26, 1999, he said, because his wife was ill and he required a health plan and wanted "steady work". As an employee his work changed "somewhat"; he was put in charge of the installers and also programmed systems.
[31] Mr. Schulz interviewed Mr. Marschall to work for the appellant. He said he told Mr. Marschall that he would be a contract installer and that the appellant did not guarantee a minimum number of hours of work. Because Mr. Marschall did not want to describe his previous job other than it was in electronics, Mr. Rosenberg recalled, they "discussed" pay of $7.00 per hour for the first month "until we determined if he was competent". During the first month Mr. Marschall did not work "independently" and "never completed a full installation by himself". Mr. Schulz estimated that it takes "at least" a month to explain to people the method of installation we use.
[32] Mr. Marschall testified that he worked for the appellant from May 5 to July 26, 1999 after answering an advertisement in the Winnipeg Free Press for an alarm technician. He brought his resumé to a meeting with Mr. Rosenberg and "discussed" his experience in cabling. Later, Mr. Rosenberg telephoned him at home to inform him "he was hired". He denied he was told he would be a "contract installer".
[33] Hours of work were not discussed with Mr. Rosenberg, according to Mr. Marschall, and Mr. Rosenberg "told" him his "starting rate" would be $8.00 per hour. Pay was later increased to $9.50 per hour when Mr. Marschall complained that after purchasing tools for $500.00, and the cost of gas and repairs, he was "only making $3.00 an hour" and he could not live on $3.00 per hour.
[34] According to Mr. Marschall, he was expected to report for work at the appellant at eight o'clock each weekday morning. At eight o'clock he would be told who he would be assisting that day. After he was given a radio, he would "call the appellant to see which technician I would go with", if he should go to the office or to an installation site. Most mornings he would first go to the appellant's office and then to the site where the instructing installer was to work.
[35] The appellant's office closed at five o'clock in the afternoon. If Mr. Marschall finished his work before then he would telephone the appellant to advise that he was going home. His day would end with the completion of the last installation. Mr. Marschall took a "few days" off during the time he worked for the appellant. During one two-week period he only worked two days.
[36] Mr. Marschall also testified that the "T-Shirt" given to him by Mr. Rosenberg was the "preferred" shirt to wear, in particular at a "high end" or business installation "so people would know who we are". He also explained that the appellant had two types of installation, an Accurate Alarm installation and a Standard Alarm installation. In the former, the wires were hidden behind the wall, in the latter, the appellant was "not too particular where the wiring went". The work order would indicate the type of installation required.
[37] Mr. Marschall was never responsible for deficient work, this was the responsibility of the installer he helped.
[38] Mr. Marschall left the appellant without notice, apparently informing the technician, Chris Rankin, he was to work with on the day he left that he "had enough" and "was going to E.I.".
[39] Mr. Vissarra also disputed evidence given by Messrs. Rosenberg and Schulz. Mr. Vissarra worked as a telephone technician in the Phillipines for 15 years before he immigrated to Canada in 1999. He was interviewed by Mr. Rosenberg who inquired as to his experience in the installation and maintenance of telephone equipment. Mr. Vissarra's initial pay was $8.50 an hour, which was increased by the appellant to $10.00 per hour after two months. Mr. Vissarra said he did not ask for the increase, although he expected it.
[40] The hours of work, according to Mr. Vissarra, were from Monday to Friday, starting at eight o'clock in the morning when he would report to the appellant's office and end when he completed the work orders for the day. Mr. Rosenberg, he testified, told him to report to the appellant every morning at eight o'clock. He was also required to telephone the appellant every time he finished a job. In case of illness he called the appellant's office as directed by Mr. Rosenberg. Mr. Rosenberg also told him to advise in advance when he wanted days off.
[41] Mr. Vissarra had a "partner" with each installation he was assigned since he was being trained. He worked for ten months at the appellant, always as a trainee, he declared, even after the training period was over. He did not install systems by himself, except for pre-wiring of houses under construction. Usually he would work in the basement and his "partner" would work upstairs. The "partner" or "lead man" was in charge, except for several days near the end of Mr. Vissarra's work at the appellant when he was the "lead man". As far as Mr. Vissarra was concerned, he was trained after a month and a half and "didn't need anyone to tell [me] what to do".
[42] It is quite obvious that with respect to the periods the workers were "trainees" or "helpers" or were teamed with another installer (as was Mr. Vissarra, for example), they were employees of the appellant. As trainees or helpers they did not have the skill to operate a business that would reasonably attract any customer. The appellant was instructing them how to install a security system in accordance with its procedures. During this time, at least, the workers were not carrying on their own businesses but were dependent upon, and under the supervision of, the appellant.
[43] Except for the witnesses who testified at trial, there is no evidence before me of the periods when the other installers were trainees and helpers and the time when they ceased to be trainees and helpers and worked on their own without supervision. However, notwithstanding that installers may have ceased to be helpers and trainees and worked by themselves, I am not at all satisfied they were independent contractors.
[44] Appellant's counsel submitted that the workers did not work in the manner normally performed by an employee. They worked irregular hours, did not have regular "stop and start times", including time off for lunch. Usually an employer wants work records submitted more frequently than every two weeks. The workers attended at the appellant's office each day not to "sign in", she declared, but to get their bookings for the day.
[45] In the view of appellant's counsel, the situation of Mr. Marschall was different from the other workers. He was experienced in electronics and had the ability to "cost out" the jobs he was given. He wanted more money. Indeed, she stated, Mr. Marschall agreed when hired that he would work as an independent contractor. He later changed his mind.
[46] The Federal Court of Appeal has directed the approach a trial judge must take in considering whether the worker is an employee or an independent contractor: Wiebe Door Services Ltd. v. M.N.R.[2]. One must consider, among other things, in combination and not separately, the degree of control exercised by the employee over the way in which the work is to be done, the ownership of tools and equipment, the chance for profit by the worker and his or her risk of loss. The degree to which the worker is integrated into the employer's business is important. Whether the worker has the power to hire people to do the work or must perform the work himself must also be considered. At the end of the day, the trial judge weighs all factors, giving appropriate weight to each factor, and comes to a conclusion based on the force of the evidence.
[47] The fact that a worker, such as Mr. Schulz, for example, may have carried on a business similar to that of the appellant at the time he worked for the appellant or that the tools required for most installations were owned by the workers or, that the workers provided their own vehicules to go to sites are not strong enough factors to overlook the preponderent weight indicating the workers were employees. The only chance of profit to the workers was if they were able to increase the number of their jobs; this is not inherent to independent contractors. Employees may increase their wages by working long hours, if work is available.
[48] The workers were employees of the appellant in 1999. For the most part they were trained by the appellant to perform their labour according to the appellant's practice and procedures. They did not have the discretion to perform their work in ways different from these practices and procedures. The appellant directly at first, when the workers were trainees or helpers, and indirectly later exercised a substantial degree of control over the way the work was to be done.
[49] I conclude that the workers were required to report to the appellant's office each morning for instructions and supervision, not simply to see what was in their bins. My observation of the witnesses leads me to prefer the evidence of Messrs. Marschall and Vissarra that there was a high degree of supervision of installers during their work by means of radio and telephone and by reporting daily to the appellant's office.
[50] The installers and their work were integrated into the appellant's business. The workers were not engaging themselves to perform the services as persons in business on their own accounts.[3]
[51] The appeals are dismissed.
Signed at Ottawa, Canada, this 19th day of April 2001.
"Gerald J. Rip"
J.T.C.C.
COURT FILE NO.: 2000-729(EI), 2000-2833(EI) and
2000-730(CPP), 2000-2834(CPP)
STYLE OF CAUSE: While-Away Security Services Inc.
o/a Accurate Alarm and
The Minister of National Revenue
AND
While-Away Security Services Inc.
o/a Accurate Alarm and
Her Majesty the Queen
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: January 30, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge G.J. Rip
DATE OF JUDGMENT: April 19, 2001
APPEARANCES:
Counsel for the Appellant: Barbara M. Shields
Counsel for the Respondent: Tracy Harwood-Jones
COUNSEL OF RECORD:
Counsel for the Appellant:
Name: Aikins, MacAulay & Thorvaldson
Barristers & Solicitors
Firm: 30th Floor, 360 Main Street
Winnipeg, Manitoba R3C 4G1
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-729(EI)
2000-2833(EI)
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on common evidence with the appeals of While Away Security Services Inc., o/a Accurate Alarm (2000-730(CPP)) and (2000-2834(CPP)) on January 30, 2001, at Winnipeg, Manitoba, by
the Honourable Judge Gerald J. Rip
Appearances
Counsel for the Appellant: Barbara Shields
Counsel for the Respondent: Tracy Harwood-Jones
JUDGMENT
The appeals pursuant to subsection 103(1) of the Employment Insurance Act for the period between January 1, 1999 and December 31, 1999 are dismissed and the decision of the Minister is confirmed.
Signed at Ottawa, Canada, this 19th day of April 2001.
|
"Gerald J. Rip" |
J.T.C.C.
2000-730(CPP)
2000-2834(CPP)
BETWEEN:
WHILE-AWAY SECURITY SERVICES INC.
O/A ACCURATE ALARM,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on common evidence with the appeals of While-Away Security Services Inc., o/a Accurate Alarm (2000-729(EI)) and (2000-2833(EI)) on
January 30, 2001, at Winnipeg, Manitoba, by
the Honourable Judge Gerald J. Rip
Appearances
Counsel for the Appellant: Barbara Shields
Counsel for the Respondent: Tracy Harwood-Jones
JUDGMENT
The appeals pursuant to subsection 28 of the Canada Pension Plan are dismissed and the determination by the Minister of National Revenue on the application made to him under section 27 of that Plan, is confirmed.
Signed at Ottawa, Canada, this 19th day of April 2001.
|
"Gerald J. Rip" |
J.T.C.C.
[1] As indicated later in these reasons, the appellant had some installers on its payroll as employees. These installers are not part of this litigation.
[2] 87 DTC 5025
[3] See Market Investigations Ltd. v. Minister of Social Security [1968], 3 All E.R. 732 at 738-9, Cook, J. cited in Wiebe Door, supra, at p.5030.