After working for 40 years at Fasken Martineau DuMoulin LLP, Vancouver lawyer John Michael (Mitch) McCormick refused to retire quietly when he hit 65, alleging that his firm’s mandatory retirement policy for partners was age discrimination.
But on Thursday, the Supreme Court of Canada put an end to his legal battle, ruling that law firms and other partnerships are allowed to force their partners to retire because they are not covered by provincial human rights codes.
The case held large implications for law firms and accounting firms, both of which are generally structured as limited liability partnerships. Some legal observers said a ruling that went the other way could have opened the door for partners to launch human rights complaints about not just age discrimination, but gender or other discrimination as well.
Most workers no longer face mandatory retirement in Canada, but it is a common provision in the partnership agreements at law and accounting firms, although law firms often allow select partners to stay on as employees past retirement, sometimes with the title “counsel.”
At issue in Mr. McCormick’s case was whether an equity partner at a law firm or an accounting firm could be considered an employee, and therefore be covered by provincial human rights codes.
The Supreme Court, in this case, said no. The court ruled that Mr. McCormick’s status as a partner, which allowed him to vote for and stand for the firm’s board and share in the firm’s profits and losses, meant he exercised too much control over his workplace to be considered a mere employee.
“This is not to say that a partner in a firm can never be an employee under the Code, but in the absence of any genuine control of [Mr. McCormick] in the significant decisions affecting the workplace, there was no employment relationship between him and the partnership under the provisions of the Code,” the unanimous judgment, written by Justice Rosalie Abella, reads.
In a brief submitted to the Supreme Court, lawyers for the country’s major accounting firms echoed arguments made by Fasken Martineau in the case, saying partners could not be employees, since they are part-owners. They also argued that mandatory retirement in partnerships was essential for attracting new employees who aspire to become partners.
Mr. McCormick, now 69, spent his entire career at Fasken Martineau, starting there in 1970 and making partner in 1979. As his 65th birthday in 2010 approached, he took his firm’s mandatory retirement policy to the British Columbia Human Rights Tribunal. In 2009, the tribunal initially ruled that it had jurisdiction over the case, a ruling supported by the B.C. Supreme Court.
But the B.C. Court of Appeal would later overturn those decisions, holding that partners could not be employees. For a time, Mr. McCormick kept working at Fasken Martineau despite the legal battle, but he has since left the firm.
His lawyers argued that partners at a big firm are essentially treated as employees, and that the firm “controlled every aspect of his working life, including his client intake, tools, support, compensation and dress.”
William Westeringh, the firm’s managing partner in Vancouver, said Fasken Martineau was “satisfied” with the decision: “This is an isolated issue that is unprecedented at Fasken Martineau.”
Murray Tevlin, Mr. McCormick’s lawyer, noted in an e-mail that the Supreme Court disagreed with the B.C. Court of Appeal’s ruling that a partner was automatically not an employee. Thursday’s ruling said courts must examine how much say a partner has over his workplace to determine whether he is actually an employee.
Gillian Hnatiw, a Toronto lawyer with Lerners LLP who works on employment cases, said there is still a question as to whether different kinds of partners with fewer rights, such as the growing number of non-equity partners at law firms, could launch human-rights complaints. But any future case would likely be difficult.
“There’s a crack in the door, there’s not a window open,” Ms. Hnatiw said.