Dibble v. Creative Music Therapy Solutions Inc., 2024 BCSC 1066 (“Dibble”) is a relatively lengthy case dealing with a whole assortment of employment-related issues. Of note, Justice Loo addressed the issues of:
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1. Whether the individual in this case was an employee or contractor;
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2. Whether the individual in this case was entitled to reasonable notice if they were a contractor;
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3. Whether the company had just cause to terminate Ms. Dibble;
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4. Whether a restrictive covenant (in this case, a non-solicit and non-compete) was enforceable; and
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5. The duty to mitigate (i.e. an employee’s obligation to take reasonable steps to find replacement employment) and avoided loss (i.e. the idea that replacement income during the notice period should be deducted from the award).
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Contractor vs. Employee

The first two issues may come as a surprise to some employers as an employer may wonder:
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1. Why someone who’s agreed to be a contractor could be an employee; and
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2. Why a contractor would be owed notice for termination.
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The answer to this lies mostly in the fact that although the courts will generally try to give effect to the deal reached between two parties, employment or employment-like relationships are treated somewhat differently due to the usual imbalance of power.
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As noted in Dibble, there is a history of cases where the courts have recognized that between the extremes of employees (who are entitled to reasonable notice) and independent contractors (who are not), there is an intermediate category of “dependent contractors” who are entitled to notice of their termination even though they are not employees. As noted by Justice Loo at paragraph 44 of Dibble:
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As a general proposition, a person on an employer’s payroll and for whom the employer makes conventional statutory deductions from his pay will be considered to be an employee. If his contract does not provide otherwise, that person is entitled to reasonable notice of termination of his employment. An independent contractor, on the other hand, is not an employee. Between those two states lies a construct of the common law: the dependent contractor. The dependent contractor is not on payroll, but in most other ways operates and is treated as an employee. A dependent contractor is entitled to reasonable notice of termination of his contract.
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Whether someone will be considered an employee, independent contractor or dependent contractor will depend on numerous factors including the level of exclusivity, degree of control over their work, the duration/permanence of the relationship, the level of integration, and the level of economic dependence. If in doubt, it is always best to consult legal counsel before terminating a contractor’s services especially if the contractor has been providing services to the company for some time.
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In Dibble, the plaintiff was able to decline work from the company (one of the indicators of independence) but depended upon the company for over 70% of her annual income.
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As the court found that she was a dependent contractor, it naturally flowed that absent a contract containing an enforceable termination clause Ms. Dibble was entitled to reasonable notice of her termination unless there was just cause.

Just Cause

The employer in this case argued that it had just cause to terminate Ms. Dibble for two reasons:
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1. she performed music at one of the company’s client locations; and
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2. she acted “unprofessionally” by refusing to follow a client’s instruction to cover up one of her tattoos (due to it being too hot) and later, when confronted by her supervisor regarding the interaction, she used curse words.

As noted in the decision at paragraph 79, just cause is seen as the “capital punishment” for workplace offences. It is therefore very rare that single incidents will constitute just cause (although it is possible). This is because just cause will only be a successful defence where the employer can show that the conduct of the employee was “fatal” to the employment relationship from the objective view of a reasonable employer in the circumstances.
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In this case, Justice Loo found that just cause was not met due to the fact that:

1. the contractual term prevented the plaintiff from accepting musical therapy work at client locations, but not music entertainment (which is what she was performing); and
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2. the “unprofessional” conduct noted by the defendant did not rise to the level of just cause, even if the defendant’s more extreme version of the events was believed. Rather, a lesser form of discipline such as a reprimand would have been appropriate.  
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Reasonable Notice and Mitigation

As a dependent contractor, the plaintiff was entitled to “reasonable notice” or “pay in lieu” of her termination. “Reasonable notice”, when there isn’t a contractual term addressing this, is calculated based on the individual’s length of service, age, role and other factors.
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In this case, the plaintiff had provided services to the company for 12 years and was 37 years old. She was therefore awarded a notice period of 12 months.
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Although she was awarded a notice period of 12 months, and the wages that she would have earned during that period were calculated as $26,346, the court reduced this award to account for her “mitigation” income.
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Mitigation is the principle that someone who suffers a loss must act in a reasonable manner to minimize that loss. In the case of employees or dependent contractors, that is in the form of finding replacement income. In this case, Ms. Dibble was able to earn replacement income through her business during the notice period and was therefore awarded only $12,090 in damages. Ms. Dibble also sought punitive and aggravated damages which were not awarded due to the fact that the company’s conduct did not rise to the required level of “bad faith” conduct.
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Restrictive Covenants

The employer in Dibble brought a counterclaim against Ms. Dibble for allegedly breaching a term of their contract that said:
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11. The contractor agrees that on the termination of this contract, the contractor will not solicit or accept work with the facility outside of Creative Music Therapy Solutions for a period of 3 years (time period) from the date of termination of this contract.
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Our courts have, in previous cases, established that terms that restrict the ability of people to find work will be presumptively unenforceable and interpreted narrowly. In other words, for this type of clause to be enforceable it needs to be reasonable as between the parties and with regard to the public interest.
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Whether or not a restrictive covenant will be “reasonable” will depend on the specific circumstances of each case and restrictive covenants such as non-competes and non-solicits are another area where seeking legal advice is recommended. This is because in some cases, a three-year timeframe for a non-compete may be enforceable (for example, in some commercial transactions) but in others (like most employment scenarios) it will not be.
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In this case, the clause failed as a result of ambiguity over terms such as “the facility” and “work”, and the geographic scope and duration were both excessive.

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