The Supreme Court of Canada (SCC) has dismissed a complaint from a lawyer who argued that his firm’s requirement that he dispose of his equity stake in the partnership at age 65 amounted to age discrimination. The ruling has implications for other professional firms, including financial firms, that are structured as partnerships.

According to a decision released Thursday by the high court, a partnership may not be a typical employer-employee relationship, which is subject to human rights law.

The decision, which establishes a test for whether an equity partner can be considered an employee under human rights legislation, may have implications for firms that are structured as partnerships in other sectors, including the financial industry.

In determining whether an employment relationship exists, the court said that “the key is the degree of control and the extent to which the worker is subject and subordinate to someone else’s decision‑making over working conditions and remuneration.”

Lawyer John Michael McCormick filed a complaint with the B.C. Human Rights Tribunal in 2009, when he was 64, arguing that the partnership agreement of Fasken Martineau DuMoulin LLP, which requires equity partners to divest their ownership shares at the end of the year in which they turned 65, amounts to age discrimination.

The firm argued that the partnership arrangement is not in the type of workplace relationship covered by the Human Rights Code.

The B.C. tribunal initially upheld the complaint, finding that there was an employment relationship. The law firm’s application for judicial review was dismissed by the B.C. Supreme Court, but the B.C. Court of Appeal allowed the appeal and concluded that an equity partner is not in an employment relationship under the Code. The SCC upheld the appeal court’s ruling.

In this case, the SCC found that McCormick had significant control over his working conditions. As a partner, he had the right to participate in the management of the partnership; the benefit of other control mechanisms, including the right to vote for the firm’s board; the right not to be subject to discipline or dismissal; protections against being expelled from the partnership; among other elements of control.

“As an equity partner, and based on his ownership, sharing of profits and losses, and the right to participate in management, [he] was part of the group that controlled the partnership, not a person vulnerable to its control, and, for over 30 years, benefited financially from the retirement of other partners,” the SCC found.

“It is true that the law firm had certain administrative rules to which [he] was subject, but they did not transform the substance of the relationship into one of subordination or dependency,” the SCC said.

While it is possible that a partner in a firm could be considered an employee under the Human Rights Code, the SCC said; in this case, it found that there was no employment relationship between McCormick and the partnership. As a result, it ruled that the tribunal had no jurisdiction over the relationship.

“We are satisfied with the decision, which reinforces our understanding of the law in British Columbia surrounding the terms of partnership agreements. This is an isolated issue that is unprecedented at Fasken Martineau,” said William Westeringh, the firm’s managing partner in Vancouver, in a statement.