Storrs v. R. – TCC: Taxpayer was an independent contractor when first engaged but gradually morphed into an employee

Storrs v. R. – TCC:  Taxpayer was an independent contractor when first engaged but gradually morphed into an employee

Storrs v. M.N.R. (February 20, 2019 – 2019 TCC 38, Wong J.).

Précis:  Ms. Storrs started working for the Ronald C. Witzke Professional Dental Corporation in 2015.  Gradually her role changed and she was providing more and more services to the Dental Corporation.  The Court held that during 2015 she was an independent contractor but that by the beginning of 2016 she had become an employee.

Decision:   The central factor in this case is that the duties of Ms. Storrs changed over the course of her relationship with the Dental Corporation:

[25]  The Appellant testified that her responsibilities initially consisted of general bookkeeping, entering accounts receivable, calculating payroll semi-monthly, and preparing cheques for signature. Both the Appellant (in her testimony) and the Payer (at questions 12, 13, and 20 in the Payer Questionnaire) agreed that she performed her bookkeeping duties at her home, without supervision.

[26]  The Appellant stated that her responsibilities later came to include: picking up mail from the Payer’s office or from the joint residence of Dr. Witzke and Ms. McNolty; sorting the mail; reconciling the Payer’s monthly bank statements; making supply runs to Costco to purchase K-cups for the Payer’s Keurig coffee maker, toilet paper, and juice boxes for the Payer’s child patients; hand-delivering cheques to vendors if the payments were late; and picking up coffee for meetings. She testified that in one instance, she made travel arrangements to Banff for Dr. Witzke and Ms. McNolty. She stated that she made herself available to the Payer around the clock and that if she did not perform these additional tasks, she was verbally reprimanded by Ms. McNolty.

[27]  The Appellant also testified that over the course of 2015, her responsibilities came to include human resources tasks, such as handling minor complaints in the office and assisting Ms. McNolty with the development of an employee manual.

[28]  Neither the Appellant nor the Payer mention these additional non-bookkeeping responsibilities in their respective questionnaires, nor are they mentioned in Ms. Papadoulis’ interview notes. However, based on the available evidence as to the parties’ conduct, I believe that the Appellant initially provided only bookkeeping services to the Payer but that over the course of the Period, she began to provide the additional non-bookkeeping services. The Appellant wished to be an employee and in furtherance of that goal, she made herself available to the Payer around the clock. The Payer, in turn, took advantage of the fact that the Appellant made herself available and eventually had her doing more than bookkeeping.

[29]  Bookkeeping is a skilled service but the non-bookkeeping services provided by the Appellant are not. I find that once she began providing these additional non-bookkeeping services, the Payer’s degree of control over her increased to a level that is more consistent with a contract of service than an independent contractor relationship.

The Court ultimately concluded that the legal status of Ms. Storrs changed at the beginning of 2016 such that prior to that date she had been an independent contractor but became an employee thereafter:

[58]  I believe that the nature of the work relationship between the Appellant and the Payer changed over the course of the Period because of the additional non-bookkeeping responsibilities she gradually assumed. However, I must draw a clear line for the purposes of this appeal. For the reasons I stated under the heading “Control”, the clearest line available to me is January 1, 2016, i.e. the point at which the Appellant joined the Payer’s group Retirement Savings Plan with Sun Life Financial. In light of the conflicting evidence presented in this appeal, it is also the most objective line.

[59]  I therefore find January 1, 2016 to be the date on which the Appellant’s opportunity for profit/degree of financial risk shifted from that of independent contractor to employee.