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LRB Says Converting Dependent Contractors to Full-time Employees Not Contracting Out
March 6, 2006

The British Columbia Labour Relations Board recently upheld an arbitration award holding that an employer did not violate the contracting out provisions of a collective agreement when it changed the status of a number of its truck drivers from dependent contractors to full-time employees.

The drivers had previously been engaged as dependent contractors for approximately ten years. While they had not been incorporated into their employer’s master collective agreement, they did have a separate seniority list and an abbreviated letter of understanding. The letter acknowledged the drivers’ desire to retain their status as dependent contractors in order to maintain certain tax advantages with the Canada Revenue Agency.

When the employer changed their status to that of full-time employees, the drivers lost the tax advantages associated with their dependent contractor status. Their union resisted the change in status, arguing that the change breached the contracting out provisions of the collective agreement. In particular, the union argued that the contracting out language was intended to protect positions generally, and in these circumstances, protected and/or preserved the actual position of the dependent contractors.

The arbitrator rejected the union’s argument, holding that contracting out provisions do not prohibit work from being added to the bargaining unit; rather, they are intended to prevent work from leaving the bargaining unit. The arbitrator also noted that none of the drivers had suffered any loss of employment as a result of the employer’s change.

The arbitrator acknowledged that the anomaly in this case was that the drivers earned more money as dependent contractors. However, a change to an employee’s earnings is not an element of the test in determining whether an employer has the right to bring work back into the bargaining unit.

The Labour Relations Board upheld the arbitrator’s decision, agreeing that the recapturing of work into the bargaining unit cannot be considered a contracting out.

Timberwest Forest Co. (Cowichan Woodlands Operation) and Steelworkers. Local 1-80, BCLRB No. B24/2006 (January 23, 2006)