Canadian Courts Diverge On Cross-border Contractor Disputes

Key Takeaways

It is not uncommon for businesses headquartered and primarily operating outside of Canadian jurisdictions to engage workers to perform services from Canada. Such workers are sometimes engaged as consultants pursuant to written agreements which contain choice of law or forum selection clauses purporting to refer any disputes arising from the arrangement to a non-Canadian jurisdiction.

In Canada, engaging a worker as a consultant can raise questions as to whether the worker is truly an arms-length commercial “independent contractor” — or instead a misclassified employee — and whether any disputes should be interpreted and adjudicated on the basis of provincial laws, by a Canadian court, notwithstanding the existence of any choice of law or forum selection clause.

The Ontario Court of Appeal and the Supreme Court of British Columbia recently considered these questions on comparable facts and, approaching the two questions in different orders, reached divergent conclusions. 

In Pringle v. Zenova Group PLC, 2026 ONCA 549 (Pringle), the Ontario Court of Appeal first analyzed whether Mr. Pringle, a founder of the defendant start-up company, was a misclassified employee for the purposes of the Ontario Employment Standards Act, 2000 before briefly considering the import, if any, of the contract’s forum selection clause. The clause provided that the agreement would be governed by, interpreted in accordance with, and subject to the exclusive jurisdiction of the courts of England and Wales. Overturning the motion judge’s findings on each point, the Ontario Court of Appeal found that Mr. Pringle was, on the merits, a misclassified employee and, consequently, party to a contract containing a forum selection clause unenforceable for contravention of Ontario employment standards legislation. 

In contrast, in Armstrong v. AirCFO, LLC, 2026 BCSC 1142 (Armstrong), a British Columbia trial court first analyzed the enforceability of the contract’s choice of law clause, which provided that the agreement would be governed by the laws of the State of Ohio, before turning to the question of whether Mr. Armstrong, a certified professional accountant, was a misclassified employee within the meaning of British Columbia’s Employment Standards Act. Finding that the choice of law clause in the contract was enforceable, the court ultimately declined to exercise its jurisdiction to deliberate the misclassification issue, leaving the question open for Ohio courts to decide. In a particularly noteworthy passage concerning the rise of remote and cross-border work, the court in Armstrong suggested that it is growing “increasingly important for contracting parties to turn their minds, at the outset, to where any contract dispute will be heard and which jurisdiction’s law will govern” without simply assuming that “the applicable forum or governing law will be obvious if a dispute later arises.”

Both the Pringle decision and the Armstrong decision concerned sophisticated plaintiffs who, for several years prior to the dispute, had been engaged to provide services for the respective defendants at all times remotely and exclusively from jurisdictions other than the jurisdiction purporting to govern their contracts. While the British Columbia trial court deferred to the text of the controlling contract between the parties, emphasizing that Mr. Armstrong, a “professional”, ought to have understood that Ohio laws governed the arrangement, the Ontario appellate court held that Mr. Pringle, a founder of the business against which he brought a wrongful dismissal action, had met his burden to establish Ontario jurisdiction over the matter, notwithstanding the text of the contract.

Takeaways for employers

Though Pringle suggests Ontario courts will tend to assume jurisdiction over work performed from Ontario, and Armstrong suggests British Columbia courts may instead defer to the text of the agreement between the parties, the decisions illustrate that courts will continue to scrutinize independent contractor arrangements concerning Canadian workers by evaluating the totality of the relationship between the parties, including — but not with exclusive reference to — the text of the contract. Organizations operating in multiple jurisdictions should therefore continue to consider the potential risks of onboarding and engaging Canadian workers from a Canadian legal lens, even if the workers are considered “founders”. In particular, businesses with operations in Ontario should bear in mind that courts in that province are increasingly drawing distinctions between an individual’s rights and obligations qua shareholder and rights and obligations qua employee (including where they may have been misclassified as a contractor).

Given that there is no employment “at will” in Canada, the employment liabilities (in addition to tax liabilities) that result from a finding of misclassification can be severe. Where a business decides that, for whatever reasons, an independent contractor agreement is the preferred route, such agreement should be carefully drafted, including in accordance with the cautions and guidance offered in both Pringle and Armstrong, respectively. Where claims of misclassification matters are litigated, careful consideration must be given the appropriate strategy, including whether and when to contest jurisdiction pursuant to a choice of law and/or forum selection clause.