Cases test whether law firm partners are employees for human rights purposes

Mndatory retirement policies draw scrutiny from the Supreme Court of Canada

It is generally settled in Canada that when employers impose mandatory retirement policies on their employees, it amounts to age discrimination in violation of the country’s human rights code. However, when Vancouver lawyer John Michael McCormick turned 65 in 2010, his law firm expected him to see his way out the equity-partnership door. McCormick had been an equity partner at Fasken Martineau (or one of its predecessors) since 1979, and the firm’s partnership agreement mandates retirement from equity partnership the year an equity partner turns 65, although he may continue working at the law firm.

McCormick filed an age discrimination complaint with the British Columbia Human Rights Tribunal, which has jurisdiction in employer/employee matters. There, the central issue became whether McCormick, a partner in a partnership, can be considered an employee for human rights purposes. If not, the tribunal would lack authority to hear the case. The Court of Appeal for British Columbia took a differing stance on this matter than previous judicial opinions from the tribunal and the British Columbia Supreme Court. 

On March 7, the Supreme Court of Canada granted McCormick leave to appeal, indicating that it will weigh in on whether a partner can be considered an employee for human rights purposes.

“The question here is what the legislature intended,” says Richard Press, a partner at Davis in Vancouver. “Did it intend that human rights would be applied everywhere, or do they only apply in an employment-type relationship?”

Partnership Pickle

Fasken Martineau contends that the Human Rights Code doesn’t apply to equity partners because the relationship between partners is one of business proprietors with the common objective of profit. The British Columbia Human Rights Tribunal in February 2011 took a broad view of employment for human rights purposes, and on appeal, the British Columbia Supreme Court agreed. 

But when the case came before the British Columbia Court of Appeal, a unanimous three-judge panel came to a different finding. “The inevitable conclusion … is that there is no employment relationship between the firm and Mr. McCormick,” Justice Risa Levine wrote for the panel in July 2012.

The Court of Appeal’s conclusion gives rise to questions about its broader implications. If women in a partnership allege sexual harassment against males in a partnership, for instance, under the Court of Appeal’s interpretation, they wouldn’t be able to invoke their rights under the Human Rights Code.

“This is just a generally interesting policy question,” says Marie-Hélène Mayer, a lawyer at Rubin Thomlinson who has written about the case. “Should those who are not technically employees be afforded some of the protections of human rights, such as [work] environments free of discrimination or harassment?”

Legal Impossibility

In addition to taking a generally broad view of the definition of employment, to determine whether an employment relationship existed, both the tribunal and British Columbia Supreme Court used an analysis examining whether the alleged employer uses or gains a benefit from the person; what sort of control the alleged employer has over the person (wage determination and working conditions, for instance); whether the alleged employer bears financial burden, or responsibility to pay the person; and whether the alleged employer can remedy the alleged discrimination. Applying this test, they both determined that Fasken Martineau and McCormick have an employment relationship.

The British Columbia Court of Appeal found that such an analysis was irrelevant because it is “a legal impossibility for a partner to be ‘employed’ by the partnership of which he is a member. … Neither a broad, liberal and purposive interpretation of the [human rights code] nor the analysis of the factual criteria of ‘utilization’, ‘control’, ‘financial burden’, or ‘remedial purpose’ can change that legal conclusion,” Levine wrote for the panel.

Employment Terms

Fasken Martineau, of course, welcomed that most recent interpretation.

“We believe the [Court of Appeal] was correct in their ruling, which reinforced our understanding of the law in British Columbia surrounding the terms of partnership agreements,” said William Westeringh, Fasken Martineau’s managing partner in Vancouver, in an e-mailed statement. “We look forward to presenting our case to the Supreme Court.”

Although the case has somewhat narrow applicability, Press says it’s possible the Supreme Court will clarify the broader issue of whether someone can be considered an employee for one purpose but not all.

“The Supreme Court of Canada may very well speak to different types of relationships,” Press says. “The court could say it’s possible that the concept of an employment relationship for human rights purposes may be wholly separate and distinct from the concept of what an employment relationship is under partnership law.”

So far, no court has had the chance to address the merits of McCormick’s attack on mandatory retirement. Such policies are common in Canadian law firms. And although the American Bar Association called for an end to mandatory retirement in 2007, in the U.S. it’s still extremely common for law firm partnership agreements to require that partners retire or de-equitize upon reaching a certain age (see “South of the Border”).

Contributing Author

Melissa Maleske

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