THE JACK BLOCK CASE SCENARIO

Jack Block has worked as an owner-operator delivering Wilson Bros products across the greater
Toronto area for over 10 years. He is one of 64 people in the Toronto operation that perform that
role for Wilson Bros.

Recently Jack was approached by a Business Agent of the Teamsters Union (IBT647), Art Ross,
who indicated that all owner-operators at Wilson Bros were really employees of the company
and should be members of the union. Art indicated that the wages and benefits negotiated for
driver/salesmen at Wilson Bros was extremely good relative to the competition and that Jack
could stop worrying about making the next sale to a customer or making the next payment on his
truck. Art added that Jack’s truck would likely be purchased by the company and the sales would
be left to the sales department. All Jack would have to do is make the deliveries and get paid
handsomely for it.

Jack enjoys being an owner-operator. He has a sense of independence, even though he wears a
Wilson Bros uniform and has a Wilson Bros logo on the side of his truck. He basically comes
and goes as he pleases and makes his profit directly on what he sells, so the more he can sell, the
higher his income. He has, however, felt the pinch of lower margins for Wilson Bros products
lately so maybe there is something to the Teamster pitch.

***

What are the advantages to Jack of remaining an independent contractor?

What are the advantages of joining the union and becoming an employee?

What are the disadvantages to Jack of each course of action?

What tests are used to determine if someone is an independent contractor or

employee?

What strategies should the company employ to help insure Jack remains and independent
contractor?

The Teamster's words are persuasive, and Jack has a lot to think about.

Some of the benefits of Jack remaining an independent contractor are that he enjoys tax benefits,
he may deduct his expenses, no withholding of taxes, fewer statutory deductions, and a greater
flexibility in his work.

However, the benefits for becoming a unionized employee are significant too – he will receive
statutory benefits, his employer will pay his workplace health & safety premiums, he will be
entitled to a reasonable notice of termination, he will benefit from employer contributions to CPP
& EI, and his employer assumes liability in certain circumstances for his actions while on the
job. The union will further collectively bargain with the employer to obtain higher wages and
benefits, as well as better protections for the general circumstances of Jack’s employment.
There are downsides to either course of action; should Jack remain an independent contractor,
his active labour is his lifeline. If he is sick, or gets injured, he will have to rely on his own
savings during his recovery as he pays for all of his own workplace health & safety premiums
and CPP & EI out of pocket. And as an independent contractor, he may be let go with no notice
if the industry has a rough quarter or three.

If Jack decides to become a unionized employee, the freedom that he enjoyed as an independent
contractor will vanish, as his employer will now control all aspects of his labour. Too, he will
have to go through the union to handle disputes, rather than addressing the company directly.

There are five tests commonly used to determine if there is an employer-employee relationship.
They are the control test, whether or not the employer has control over how, where, and when the
individual’s work is preformed; the risk test, whether or not the individual has an expectation of
profit or financial loss; the organization test, whether or not the services rendered by the
individual are an integral part of the business; the durability and exclusivity of relationship test,
or the time that the existing business relationship has lasted; and finally, the tools test, whether or
not the individual supplies his own tools, or other similar capital. (Filsinger, 3rd ed., 28-9)

Some strategies for the company to keep Jack an independent contractor would be to emphasize
to him that there would be significant and profound changes in his work-day. He already earns a
high income and greatly enjoys his freedoms, but as an employee, he would not be able to “come
and go as he pleases.” He seems to enjoy the banter of sales and commissions as well, but would
likely become just a truck driver as an employee. Jack would need to ask himself if he’d be
willing to give up the freedom and flexibility that he currently enjoys for a different life entirely.