Court awards terminated Ontario ‘dependent’ contractors $125K in lieu of notice

TORONTO – Ontario’s top court has shut down another attempt by a kitchen company to get out of paying severance to two workers it alleged were contractors, not employees.

In its decision Wednesday, the Appeal Court agreed that Canac Kitchens owed Marilyn and Lawrence Keenan $125,000 in lieu of 26 months’ notice.

At issue, the court said, was the nature of the relationship between the couple and company based in Thornhill, Ont., which shut down abruptly in March 2009, and what might be a reasonable notice period.

Court documents show Canac employed Lawrence Keenan from 1976 installing kitchen cabinets. He worked his way up to foreman supervising installation crews. His wife, who had been helping her husband informally, began working for Canac in 1983 as a supervisor.

In 1987, the company told them they would no longer be considered employees, but could carry on their work as contractors. As part of the agreement, they had to agree to devote their full-time and attention to Canac, which was a division of U.S.-based Kohler.

The Keenans went along with the plan, essentially because they had little choice and because not much actually changed under the new arrangement. They still considered themselves loyal Canac employees, wore shirts with the Canac logo, and used the company’s business cards, court records show.

When Canac shut down in 2009 – he was now 63 years old and she was 61 – the company said their services were no longer needed. Canac argued the Keenans, as independent contractors, were owed nothing. The couple sued.

In a decision early last year, Superior Court Justice Graeme Mew found the arrangement started in 1987 had been “almost exclusively for Canac’s benefit,” and that the Keenans had been “dependent” contractors and therefore entitled to reasonable notice of termination, which he set at 26 months.

Even though they had done some work for another company in the two years before their termination, Mew ruled that did not change the situation.

On appeal, Canac argued the Keenans should not have been considered dependent contractors because they had not been working exclusively for the company before the relationship ended.

The Appeal Court rejected the argument.

“Of the approximately 32 and 25 years of service that Lawrence Keenan and Marilyn Keenan respectively gave to Canac, in all but two of those years, they exclusively served Canac,” the court said.

“For over a generation, they were Canac’s public face to the outside world. Over a period of approximately 30 years – the entirety of their working lives – the Keenans’ income had come from Canac and they relied on that income to support themselves and their family.”

Given the nature and length of their service and ages at the time of termination, the Appeal Court agreed that damages equivalent to 26 months notice was reasonable – similar to an award given in another case involving a former employee of the company.

The court also ordered Canac to pay the Keenans $24,000 in costs.