In Davidson v. T.E.S. Contracting Services Inc., 2025 ONSC 3537, the Divisional Court upheld the Superior Court’s decision denying certification of a proposed class action lawsuit, in which the proposed class members had claimed over $145 million dollars in damages and other forms of extraordinary relief.
In this case, the representative plaintiff, Ann Davidson (“Davidson”), primarily argued that T.E.S. – which provides a range of staffing, payrolling, and contract administration services – was in fact her employer and the employer of thousands of proposed class members, by virtue of the temporary help agency provisions in section 74.3 of the Employment Standards Act, 2000 (the “ESA”). Davidson argued that if there was an agreement by a temporary help agency to assign any person, including true independent contractors, to a client, or where the employer merely acted in a payroll and contract administration role, section 74.3 of the ESA automatically deemed them to be employees.
The class Davidson sought to certify included all individuals who had signed independent contractor agreements with T.E.S. since 2009 (over 21,000 individual contracts and 935 client organizations).
If successful, this action would have had the effect of automatically converting into employees all of the independent contractors assigned by T.E.S. to a client on a temporary basis or where T.E.S. was only acting in a payroll and contract administration capacity. The action would have also impacted all other temporary help agencies in the Province in the same way, which would have had a lasting and devasting impact on the search, employment and staffing industry.
The original motion judge, the Honourable Justice Glustein, declined to certify the class action, ruling that Davidson had failed to establish that the Plaintiff’s action could properly be conducted as a class action. For a more detailed review of the Certification Decision (reported at 2024 ONSC 3066), see our previous article. Davidson appealed the Certification Decision to the Divisional Court.
In a decision released June 17, 2025, the Divisional Court unanimously dismissed the Plaintiff’s appeal and effectively affirmed Justice Glustein’s original decision to deny class action certification.
The issue in the decision and the appeal centred on what constitutes an agreement to assign under section 74.3 of the ESA. The Divisional Court agreed with the motion judge that section 74.3 only applies if the agency “placed”, “arranged”, or “matched” the temporary worker with one of its clients, or attempted to do so. Put simply, merely providing payroll services or contract administration services to a client will not be nearly enough to meet that test.
Most critically both Justice Glustein and the Divisional Court agreed with the position of the Ministry of Labour that when determining the question of whether an agreement to assign under section 74.3 has occurred, each case must be determined on its own unique facts. Since class actions depend on the ability to decide questions for all class members in common this finding should have a devasting impact on the ability to successfully bring this type of class action in the future.
Mathews Dinsdale lawyers Jeffrey Goodman, Stephanie Ramsay and Prateek Awasthi appeared on behalf of the Defendant, T.E.S. Contract Services Inc. If you have any questions about misclassification class actions, or any questions relating to workplace law generally, please do not hesitate to contact a Mathews Dinsdale lawyer.
