Supreme Court denies lawyer’s challenge of firm’s mandatory retirement for partners

Partner not an employee subject to protection from age discrimination due to degree of control over conditions and income
|employmentlawtoday.com|Last Updated: 05/23/2014

A British Columbia lawyer who was forced to retire as a partner of his law firm has had his claim of age discrimination denied by the Supreme Court of Canada.

Fasken Martineau, like many law firms and other professional practices, had a mandatory retirement policy for its partners. When John McCormick, a partner at Fasken’s Vancouver office, reached the age of 65, Fasken attempted to enforce this policy.

Although mandatory retirement is largely prohibited across Canada, Fasken believed its partnership retirement policy to be legal because McCormick was an “equity partner” — he held a percentage ownership interest in the firm — and, as such, could not be an employee. Under traditional partnership law, if a member of a partnership is a partner, then it is not legally possible to also be an employee. However, McCormick challenged the policy, claiming he was an employee of the firm and subject to protection against age discrimination under the B.C. Human Rights Code.

The B.C. Human Rights Tribunal found that for the purpose of B.C. human rights legislation, a partner could be an employee. Although it accepted McCormick was a partner under the tenets of partnership law, it held there could be multiple legal perspectives. Fasken was a large law firm and McCormick’s interest was small, just one of many partners. In practical terms, his small interest did not allow him to exercise control, said the tribunal. A partnership management agreement placed effective control in the hands of an executive committee and a CEO, who managed Fasken’s affairs and the firm’s relationship with its partners. In that sense, the tribunal considered McCormick more an employee than a partner.

Fasken applied to the B.C. Supreme Court, which agreed with the tribunal’s decision. The court found the partnership agreement allowed the firm to “exercise employment-like controls” over partners and their work, which created a relationship similar to that of employer and employee.

However, Fasken appealed again and the province’s Court of Appeal overturned the earlier decisions. The appeal court determined that a partner in a limited liability partnership was not employed by the other partners and was therefore not an employee covered under the protection of the code for employees.

McCormick brought the case to the Supreme Court of Canada, which recently dismissed the appeal.

Canada’s top court found that the test for determining employment was who controlled working conditions and pay. Since McCormick was a partner, had a say in the management of the firm and a share in its financial gains and losses, he had some control and wasn’t completely subject to the whims of the firm’s decisionmakers, said the court.

For more information see:

McCormick v. Fasken Martineau Dumoulin LLP, 2014 SCC 39 (S.C.C.).

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