Alberta labour board clarifies why duties, not industry, determine construction exemption
A recent Alberta Employment Standards Appeal Body decision has brought renewed attention to how employers in the construction sector classify workers – and the risks of getting it wrong.
The case — Lika Contracting and Services Ltd. v Roldan, 2025 ABESAB 14 — saw the employer appeal an earlier order by an Employment Standards officer, only to see an increase in what they owed the employee as a result.
The decision turned on whether a worker, primarily a driver delivering materials and removing waste from job sites, qualified for the construction worker exemption under Alberta’s Employment Standards Regulation (ESR).
The employer thought he did, but the tribunal disagreed, ordering the employer to pay him termination entitlements owing to an employee.
Broad interpretation of ESR regulations trip up employers
According to Christine Plante, partner at Bennett Jones in Calgary, interpreting section 5(1) of the Alberta ESA is a common area of confusion for employers: “The biggest misunderstanding about the way that the exemption in section five of the regulations is meant to apply is that people think it applies to the industry that the employer is in.”
The section stipulates that employees are not entitled to termination notice if they are “employed at the site of and in the construction, erection, repair, remodelling, alteration, painting, interior decoration or demolition of any… building or structure,” among other listed locations.
This statement is often interpreted too widely by employers, Plante explains.
“The court or the Tribunal will look at the individual worker's function and role and activities,” she says.
“It doesn't matter whether or not the employer is a construction company or in the construction industry, it matters whether or not that individual worker performs activities that fit within the exemption.”
Construction worker exemption: focus on job duties
The employee was initially hired and paid as an independent contractor, receiving $25 per hour with no payroll deductions from May 9, 2023, until August 1, 2023, when he was formally added to the company’s payroll. However, his job duties and level of supervision remained unchanged.
In November 2023, after a miscommunication about absentee days, Lika terminated the employee with cause, prompting him to file his first Employment Standards complaint. He was awarded overtime, vacation, and general holiday pay – but not time in lieu of notice because that officer determined he was “engaged in construction.”
Lika appealed that decision, claiming among other things that since it had not paid the employee tax and other deductions, he should not be considered an employee.
However labour relations board vice-chair Karen Scott found instead that the individual had been an employee of Lika for the entire period of his work, and therefore was not exempt from standard employment protections as a construction worker for the entire time: “The fact that a person is paid without source deductions does not preclude an employer-employee relationship,” she wrote.
Construction exemption addresses project-based work
The board also found that his duties did not involve on-site construction work, underscoring the importance of analyzing the actual day-to-day activities of each worker. As Plante explains, the purpose of the exemption is to address the cyclical nature of construction and other project-based work.
“Rather than a constant cycle of hiring and firing and hiring again and firing again, they make it clear that a construction worker knows they're being hired to build or reconstruct or remove a specific project,” she says.
“And when that project is over, they may or may not have work with this company again.”
This approach recognizes that certain roles, such as on-site safety consultants, for example, may be included in the exemption even if they are not physically taking part in the construction, she adds; the focus is always on the substance of the work performed, not simply the worker’s proximity to a construction project.
Employee vs. contractor: the classification test
The decision also addressed whether the worker was an employee or an independent contractor. This distinction is critical, says Plante, as it affects entitlement to statutory benefits, protections, and employer obligations.
There is a three-part test – control, equipment, and risk – that forms the backbone of employee classification in Canada, she explains, but it’s still not a simple application.
“Calling a worker, a contractor or a construction employee, doesn't make it true — it has to be true in fact and in function,” she says, stressing that doing this work on the front end during hire is important.
“Really take the time, on an individual basis for each worker, to decide whether or not they are classified properly as a contractor or an employee. Classify them properly up front, because otherwise, if you misclassify them … that can result in the accrual of liability.”
