In McCormick v. Fasken Martineau DuMoulin LLP, the Supreme Court recalibrated the points of reference for determining whether an equity partner in a professional partnership could be considered an “employee” for purposes of the British Columbia Human Rights Code [the “Code”].

McCormick, who had been an equity partner of Fasken Martineau, and its BC predecessor Russell DuMoulin, for over thirty years, and a former member of its executive committee, was forced to leave the partnership at age 65 under a clause of the partnership agreement. He filed a complaint with the B.C. Human Rights Tribunal alleging age discrimination.

Because of an inclusive/open-ended definition of “employment” in the Code,the Tribunal, focusing on the manner in which McCormick’s independence was restricted by partnership directions, found him to be an employee for purposes of enforced retirement at age 65, and that his forced departure could therefore be viewed as violating the age discrimination provisions of the Code.

The British Columbia Court of Appeal focused almost entirely upon the text of the Partnership Act to dismiss the complaint, finding that being a partner, in law, was inconsistent with any concept of an employment relationship. In its view, the vessel within which the parties had contracted, a partnership, precluded application of any employment relationship, and therefore any presumed application of the Code’s age discriminati  on provisions.

The Supreme Court first found that however elastic the Code’s definition of “employment”, at s. 1 of the Code, “[i]t is the duty of boards and courts to give [provisions] a liberal and progressive construction, without reading the limiting words out of the Act or otherwise circumventing the intention of the legislature.” [para. 21; our emphasis]

The Court determined that discerning an “employment” relationship required an examination of two-fold synergetic aspects:

  • Top down control/dependency – how and to what degree a reputed employee’s working conditions are dictated by the ostensible employer, reducing his margin of independence to next to nil in resolving or remediating issues;
  • Bottom-up ability to effect change through participati  on in decision making – direct or indirect.

While nothing precluded the legislature from making partnerships subject to human right legislations, the Court noted that, while McCormick was, like all other partners, subject to certain administrati ve rules, in no material way, structurally or substantively, was he ever in a subordinate position vis-à-vis any other equity partner sufficient to transform his relationship into one of subordination or dependency. He shared losses and profits with other equity partners for over 30 years, profited from the enforced retirement of other partners, and could not in such circumstances transform the substance of the relationship between him and Fasken into one of alleged subordination and dependency, only when it would be seen to advantage him. Management and compensation committees, elected by the equity partner, are “necessary mechanisms to implement and coordinate the firm’s policies, not limitations on a partner’s autonomy [… as they were] accountable to, and controlled by, the partnership as a whole, of which Mr. McCormick was a full and voting member.” [para. 40]

The fact that the Code was inapplicable would not leave a partner like McCormick entirely without remedy in that the Partnership Act requires each partner to act with “utmost fairness and good faith towards the other members of the firm in the business of the firm”. [Partnership Act, subs. 22(1), quoted at para. 47]

The Court did not dismiss the possibility of an equity partner, as a matter of law, being viewed as an employee as the Court of Appeal did. Rather it viewed the matter as one of jurisdictional fact that might vary from case to case.

The takeaway for all professional relationships is that the form of the organization that is chosen is not per se dispositive and conclusive. Different facts might produce different results. What is important though in determining what type of relationship is present is not just the parameters of the individual’s autonomy, but his ability, in lockstep with and to the same extent of those of his fellows, to influence decision making by the collectivity.