http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/120694/index.do
Menoudakis v. M.N.R. (October 23, 2015 – 2015 TCC 248, V. Miller J.).
Précis: The issue in this decision was whether instructors at the Rockstar Music School and Concert Hall (“Rockstar”) were employees for EI and CPP purposes. The Court applied the familiar tests and concluded that the five individuals involved were indeed employees and dismissed the appeal of Ms. Menoudakis who, along with her husband, ran Rockstar as an unincorporated concern.
Decision: The Court rejected the argument that the contract with the instructors evidenced an intention that they be independent contractors:
[10] John Menoudakis testified that it was Rockstar’s intention to hire the Teachers as independent contractors and the Teachers had been informed of this intention. It was his evidence that he told each Teacher that they were each responsible for filing their own business name with the government. He stated that each Teacher agreed and signed a “Music Teacher Contract” (exhibit A-1) (the “Contract”) with Rockstar. Exhibit A-1 was signed by Caitlin Nugent.
[11] However, contrary to Mr. Menoudakis’ evidence, it is my opinion that the Contract was not an agreement that the Teacher was working with Rockstar as an independent contractor. Rather it was a non-competition agreement. The Teachers who may have signed the Contract agreed that they would not contact any of Rockstar’s clients with the intention of soliciting their business.
[12] Both AB and Daniel Piatkowski stated that they intended to work for Rockstar as employees. Both witnesses stated that they did not sign and had never seen the Contract. They each testified that they did not register their own businesses nor did John Menoudakis tell them that they should register their own businesses. I believe both AB and Daniel Piatkowski.
As to control:
[20] I have concluded that Rockstar exercised control over the Teachers. It set their work schedules albeit at a time they were available. Rockstar generally told the Teachers what style of music to teach. The Teachers had to get permission to be absent and could not send a replacement. The evidence showed that even when a Teacher requested time off Mr. Menoudakis exercised the right to refuse the request. Mr. Menoudakis even instructed the Teachers on how they were to interact with the students’ parents.
The question of ownership of tools pointed to an employment relationship:
[22] Rockstar provided the classrooms, pianos, keyboards, microphones, music books, amplifiers and music stands. The Teachers who taught guitar and voice used their own instruments. Mr. Menoudakis testified that many of the Teachers used their own laptops to obtain songs. However, this was not a requirement of their work relationship. It was a choice that the individual teachers made.
The instructors had no chance of making a profit:
[26] Rockstar determined the number of students which would be assigned to each Teacher. It is clear that the Teachers had absolutely no chance of profit in the entrepreneurial sense. They were paid a flat fee per half hour. The Teachers had no client base. The students and their parents were the clients of Rockstar.
Nor did they have any risk of loss:
[28] The Teachers did not invest in the business of supplying music lessons. Those Teachers who used Rockstar’s instruments had no financial risk whereas those who used their own instruments had a minimal financial risk. It was limited to the cost of their guitar and laptop.
As a result Ms. Menoudakis’ appeals were dismissed.