Human rights legislation in Canada prohibits discrimination in employment. In Ontario, this is found in Section 5 of the Human Rights Code. In Ontario, Section 3 of the Code also prohibits discrimination in contracts of any sort, not just employment contracts. Both of those sections prohibit discrimination on the basis of “age”, which is defined as 18 and older. In both Ontario and B.C., until recently, “age” was defined as 18-64, so that forced retirement provisions in employment contracts taking effect on an employee’s 65 birthday or thereafter were lawful, but both provinces repealed the outer age bracket. That change occurred in 2008 in B.C.
How then do law firms (and other businesses for that matter) maintain contract terms with their partners that require the partners to retire at age 65?
That is the issue in a fascinating recent decision from the B.C. Human Rights Tribunal called McCormick v. Fasken Martineau. McCormick worked decades in the Vancouver office of the firm and by all accounts was an excellent lawyer. So this is not a case of poor performance. The partnership agreement that all Fasken partners sign requires partners to “retire as an Equity Partner at the end of the Year in which the Partner reaches the age of 65.” This would put McCormick out on his butt at the end of this month–January 31, 2011. He doesn’t want to leave. And since the firm was not prepared to keep him around, McCormick filed a human rights complaint alleging that the contract is illegal since it discriminated against him on the basis of his age.
Fasken argued that the Human Rights Code of B.C. does not apply to Partners, since they are not “employees” of the firm, and the B.C. Code only regulates employment contracts. The B.C. Code does not have the equivalent of Ontario’s Section 3 ban on discriminatory “contracts”. Interestingly, Fasken concedes that it obtained a legal opinion advising that the partnership agreement’s mandatory retirement provision violates Section 3 of the Ontario Code (see paragraph 47), but argued in this case that the provision does not violate the B.C. Code.
Do you agree that a partnership agreement requiring partners to retire at a specified age violates Section 3 of the Human Rights Code? Remember, a contract term that violates the Code is illegal, even if someone “agrees” to it, since you cannot agree to a discriminatory contract term.
Since the B.C. Code does not include a “contract” provision like Ontario, the McCormick case turns on whether he is an “employee”. If so, then the ban on discriminatory employment terms applies. If he is not an employee, but an “owner”, as Fasken alleges, then the Code does not apply. The Tribunal ruled that McCormick is an “employee”, and therefore that the Code applies to his “employment” at Fasken. The Tribunal has not yet ruled whether Fasken discriminated against McCormick. That will be determined in the next part of the hearing, if this case does not now resolve itself through some sort of settlement before then.
In deciding that Fasken partners are “employees”, the Tribunal applied traditional tests. It looked at who has control over the work and said this:
The firm managing partner and regional managing partners can delegate specific functions, responsibilities, authorities and accountabilities to him. The firm employs and directs his support staff. It requires that he use its standard forms, and adhere to its policies regarding file acceptance, billing procedures, retainers, time recording, collections and write-offs. The firm requires that he subject his written opinions to review by another partner before giving them to clients. The firm prevents him from acting for certain kinds of clients and in certain kinds of matters which it regards as creating “business conflicts of interest”. The firm may require him to decline profitable work if it considers that will serve the strategic interests of the firm. The firm can appoint both client managers and file managers for clients and matters which Mr. McCormick brings to the firm. The firm requires him to devote the whole of his working time to its business, unless the firm managing partner gives him written permission to do otherwise – which permission may be withdrawn at any time. The firm establishes and administers, and may change at any time, the criteria used to determine his compensation. The firm restricts his ability to go to work for a competitor, or to take clients of the firm with him if he leaves. The firm may expel him. The firm prohibits him from entering into financial arrangements or contracts on behalf of the firm without its authorization. The firm can require him to retire.
In light of these factors, the Tribunal ruled that partners are under substantial control of the firm, more akin to an employee than an independent, self-employed professional. Moreover, the firm determines partners’ pay, rather than a situation in which compensation is directly tied to billable hours. Considering also that human rights legislation is intended to be read expansively as remedial legislation, all of these factors lead to the conclusion that Fasken partners are “employees” of the law firm. This case involves Fasken, but it could have been any number of other law firms in Canada. Mandatory retirement terms at law firms are very common.
If human rights legislation applies to law firm partnerships–either because partners are “employees” or, in Ontario, because the partnership agreements are covered by Section 3—then I wonder if we might see more women bringing human rights complaints alleging systemic discrimination in law firm practices. Remember the LaCalamita v. McCarthy Tetrault lawsuit? She opted for the common law route, but might she have been better off filing a human rights complaint alleging she had been denied partnership because of a prevailing “culture of sex discrimination” at McCarthy? There is no doubt that women fair less well than men in terms of advancement and compensation at many law firms in Canada. See the report of the Law Society of Upper Canada on the Retention of Women in Private Practice. The firms argue that this is due to performance and greater family commitments, and not gender. Others argue that there is systemic discrimination engrained in the cultures and practices of these firms. If that is the case, then human rights litigation may have a better chance of addressing the problems than one-off lawsuits like that filed by LaCalamita.
What do you think? Would human rights ligation be likely to improve the situation for women in Canadian law firms.