In Davidson v. T.E.S. Contracting Services Inc., 2025 ONSC 3537, the Ontario Divisional Court agreed with an earlier decision by the Superior Court to reject a proposed class action lawsuit. The lawsuit had aimed to claim over $145 million and could have had major consequences for the staffing and contracting industry.
What Was the Case About?
The case was brought by Ann Davidson, who had worked with T.E.S. Contracting Services Inc. (T.E.S.), a company that offers staffing, payrolling, and contract administration services.
Davidson argued that she — and thousands of other independent contractors — were actually employees of T.E.S., and not truly self-employed. She relied on a section of Ontario’s Employment Standards Act (ESA) that deals with temporary help agencies.
Her main claim: if a company like T.E.S. assigns someone to a client, even if that person signed a contractor agreement, they should be considered an employee. She also argued that even if T.E.S. was only handling payroll or paperwork, that should still count as an “assignment” under the law.
What Did She Want?
Davidson tried to get the court to approve a class action that would include everyone who had signed an independent contractor agreement with T.E.S. since 2009 — more than 21,000 contracts across 935 clients.
If she had won, it could have automatically turned thousands of contractors into employees, even in cases where the staffing agency only handled payments or contracts.
This could have caused serious problems for the staffing and recruiting industry, and limited how independent contractors work in Ontario going forward.
What Did the Court Decide?
The judge rejected the class action, saying Davidson didn’t prove it could be managed properly as one case for everyone involved.
Davidson appealed that decision, but on June 17, 2025, the Divisional Court agreed with the judge’s original ruling and dismissed her appeal.
The Main Legal Question
The big question in this case was: what counts as assigning a worker to a client under section 74.3 of the ESA?
The court said this only applies if the agency actively places, arranges, or matches the worker with a client — or tries to.
Just handling payroll or contracts? That’s not enough to make someone an employee under that law.
Why This Matters for Contractors
Both courts agreed with the Ministry of Labour, saying that every situation needs to be looked at individually. There’s no one-size-fits-all rule.
That’s a big deal because class actions depend on treating everyone in the group the same way. Since every contractor’s situation is different, this decision makes it much harder to launch future class actions like this one.
Who Was Involved?
Jeffrey Goodman, Stephanie Ramsay, and Prateek Awasthi from Mathews Dinsdale represented T.E.S. Contracting Services Inc. in this case.
If you’re an independent contractor and have questions about how this decision could affect you — or if you’re unsure about whether you’re truly a contractor or employee — it is always a good idea to work with an accountant who can help you ensure your business is not classified as a PSB – this is where we can help!
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