Workers Compensation Act – The Test for Whether a Salesperson Is an Independent Contractor or Worker #342
By Gerry Neely
Earlier this year, the British Columbia Real Estate Association (BCREA) circulated a decision made at a hearing by a panel of the appeal division under the Workers Compensation Act. It dealt with the question of whether a real estate salesperson is an independent contractor or a worker within the meaning of the Act.
At stake for the salesperson who had been injured in an automobile accident was the possibility that her action for damages could be dismissed if she were held to be a worker. Her agent joined in the proceedings because of the liability that might be incurred if the appeal panel concluded that she was a worker employed by the agent.
The salesperson worked out of a Sussex office, which was registered with the Workers' Compensation Board (WCB) as the employer for its office staff, but not for the salespersons in the office. Each salesperson paid a flat fee of $175 per month, plus five per cent of commissions, with a minimum of $50 and maximum of $125 per sale.
The extent of control exercised by an employer over an employee is one factor in determining the status of that individual as a worker or independent contractor. The contract between Sussex and the salesperson contained terms - many of which will be familiar to licensees - that gave the agent control over the salesperson (e.g., all listings belonged to the agent; only real estate forms approved by the agent could be used; all printed material was purchased from the agent; advertising needed prior approval, etc).
The contract did not set the salesperson's working hours or her sales goals, limit her right to hire a helper or decide how to get clients. Many of the terms were intended to satisfy the agent's franchise agreement or to meet the requirements of the BC Real Estate Act, the Real Estate Council of British Columbia or the real estate board. Few terms attempted to control how the salesperson carried on her business. That favoured independent contract status.
Another factor may be the significance of the Real Estate Act's definition of a salesperson as an employee of an agent. One appeal panel denied independent contract status because this definition does not allow for a significant degree of independence on important business matters. However, the appeal panel in this case noted the evolution away from the employment mode in the real estate industry. There is less control over salespersons' conduct and a transfer of responsibility to salespeople to generate business and hire staff. The panel also noted that the definition of an employee / worker will differ under different legislation.
In a previous decision, a distinction was made between a salesperson who received all of the commission and paid a flat monthly charge and a salesperson whose service charge was based upon a percentage of commission earned. The significantly greater potential business loss in the first instance suggested an independent contractor and the lesser risk pointed to an employer/worker relationship.
Following that decision, BCREA obtained confirmation from the WCB Director of Assessments that a licensed salesperson who paid no less than $100 per month desk rental and all of his or her other expenses, and worked on a commission basis, would have independent contractor status. This confirmation was subject to the payment and charges to a salesperson reflecting the contract terms.
The panel also referred to the following positive factors which might support independent contractor status. One is the acceptance by the Canadian Customs and Revenue Agency (CCRA) of independent contractors.1 Another is the desirability of maintaining consistency within the WCB system, so the public can plan its business dealings. The panel expressed its reluctance to deviate from the WCB's Assessment Department classification of the salesperson as an independent contractor.
The appeal panel concluded that these factors supported the salesperson's classification of independent contractor. If she had been classified as a worker, the agent would have to pay an amount equivalent to the assessments that would have been levied for the salesperson/worker; would have to pay higher premiums in the future; and, depending upon other claims, might face a higher, risk-based claim.
A salesperson who hires a helper has the same obligation as any other employer, to register as an employer with the WCB. If the helper is injured and the salesperson is unregistered, the salesperson will be liable for the repayment to WCB of benefits paid to the helper, as well as payment of prior amounts that would have been assessed.2
|See Legally Speaking 228 for a more detailed discussion of independent contractor status and the CCRA.
|Fratino v. Logan,S.C.B.C, Vancouver Registry B961756, WCB Appeal Division, 2001-1772, Reasons for Judgment, June 14, 2001.
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