The Supreme Court of Canada has upheld a law firm partnership's mandatory retirement policy in McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39. In doing so the Court found that the partner was not an "employee" entitled to age discrimination protection under the British Columbia Human Rights Code (the "Code").
John (Mitch) McCormick was an equity partner at the Vancouver office of the Fasken Martineau DuMoulin LLP law firm. As a partner, McCormick was a party to the partnership agreement that governs the relationship among all Faskens' partners. The partnership agreement requires each equity partner to retire at the end of the year in which the partner reaches the age of 65. McCormick turned 65 in 2010 and was required, as per the terms of the partnership agreement, to retire by January 31, 2011.
Before his mandatory retirement date, McCormick brought a complaint against Faskens under the Code, alleging that he had suffered discrimination on the basis of age. McCormick's complaint was based on the allegation that Faskens persistently tried to compel him to retire from the firm in compliance with the agreement, including demanding that he relinquish his equity partner status, denying him increases in compensation, refusing bonuses, arbitrarily increasing performance goals and generally treating him in a manner inconsistent with both his performance and how other equity partners were treated at the firm. The case worked its way up from the BC Human Rights Tribunal all the way to the Supreme Court.
Supreme Court of Canada Decision
The Supreme Court held that McCormick was not an employee under the Code and that therefore the Human Rights Tribunal has no jurisdiction over his relationship with the partnership.
When deciding who is in an employment relationship for the purposes of the Code, the Court focused its analysis on two factors: (i) control exercised by an employer over working conditions and remuneration, and (ii) a corresponding dependency on the part of a worker. Based on these two factors, the Court outlines these key questions for determining whether an employment relationship exists: who is responsible for determining working conditions, who determines financial benefits, and to what extent does the worker have an influential say in these decisions?
Looking to the factors of control and dependency, the Court found that McCormick was a part of the group that controlled the partnership, not someone vulnerable to its control. While McCormick was subject to the partnership's administrative regime, its rules did not transform the substance of the relationship into one of subordination or dependency. The Court looked specifically to the ability of individual equity partners to participate meaningfully and equitably in the decision making process which determines both their workplace conditions and remuneration including the right to vote, the right to stand for election to the firm's board, the duty owed to him by other partners to render accounts, the right not to be subject to discipline or dismissal, the right to his share of the firm's capital accounts and the high threshold for expulsion from the partnership.
The Court did not close the door completely on the applicability of the Code to partnerships, holding that its decision "is not to say that a partner in a firm can never be an employee under the Code, but such a finding would only be justified in a situation quite different from this case, one where the powers, rights and protections normally associated with a partnership were greatly diminished."