In Cooper v GFI Solutions Ltd, 2026 ABCJ 142, the Alberta Court of Justice considered two important employment law issues: whether a worker paid through a professional corporation was truly an independent contractor, and when an employer’s conduct at termination justifies aggravated damages.
The Court found that Ms. Cooper was an employee, notwithstanding that she invoiced through her professional corporation and was sometimes described as a contractor. It also awarded her $30,000 in aggravated damages after concluding that the employer acted in bad faith in the manner of dismissal.
Employee or Independent Contractor?
Ms. Cooper provided accounting and financial services to GFI for more than six years, eventually holding the title of Chief Financial Officer.
Although she invoiced through a professional corporation and no statutory deductions were taken, the Court focused on the total relationship between the parties, rather than labels or payment structure.
Several factors pointed strongly toward employment:
- the agreement itself repeatedly used the language of employment;
- Ms. Cooper was integrated into GFI’s management structure;
- she reported to the company’s principals and had employees reporting to her;
- GFI supplied her equipment, software, cellphone, professional insurance and part of her benefits;
- she could not substitute others to perform her duties;
- she bore little financial risk and had no meaningful opportunity for profit beyond her fixed compensation; and
- her work was performed for GFI’s business, not for a separate business of her own.
The Court also held that the use of a professional corporation was largely a payment mechanism and did not alter the substance of the relationship. Even if she had not met the test for employee status, the Court found she would at minimum have been a dependent contractor, and therefore still entitled to reasonable notice.
Reasonable Notice and Mitigation
The Court assessed an eight month reasonable notice period (severance), but Ms. Cooper obtained new employment after approximately four months.
Her damages were therefore limited by mitigation to four months of compensation, benefits and related payments, for a total of $39,771.84.
Why Aggravated Damages Were Awarded
The more significant aspect of the decision was the employer’s conduct after termination.
Ms. Cooper was initially told that her employment was ending because GFI was restructuring and moving operations to Whitecourt. No performance concerns were raised at that time. She was then asked to continue working in April to help transition her replacement.
Only later, after she sought additional compensation, did the employer begin alleging serious accounting errors, negligent performance and potential liability. The Court noted that those allegations had not been raised during her employment or at the time of dismissal.
The employer also characterized payment for April as an additional or gratuitous payment, even though Ms. Cooper had actually worked during that period at GFI’s request. The Court found that characterization misleading and unfair.
Taken together, the Court concluded that GFI’s conduct was not candid, honest or forthright. Its actions were found to be unfair, misleading and unduly insensitive.
Ms. Cooper testified that she experienced significant anxiety, sleep disruption and ongoing mental distress, and had sought counselling. The Court found that the harm went beyond the ordinary upset associated with losing a job.
The result was an award of $30,000 in aggravated damages for bad faith, in addition to her wrongful dismissal damages.
Key Takeaway
Cooper reinforces two important principles.
First, calling someone a contractor—or paying them through a corporation—does not determine their legal status. Courts will examine the reality of the relationship, including control, integration, financial risk, opportunity for profit and whose business the worker is actually serving.
Second, the manner of dismissal matters. An employer that changes its explanation for termination, raises unsupported allegations after the fact, withholds compensation for work actually performed, or otherwise acts in a misleading or insensitive manner may face aggravated damages where that conduct causes real mental distress.
The total award was $69,771.84, consisting of $39,771.84 in wrongful dismissal damages and $30,000 in aggravated damages for bad faith.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018 and Evolution Legal in 2026.
FAQs
Can someone be an employee even if they invoice through a corporation?
Yes. Cooper confirms that using a professional corporation or invoicing for services does not determine legal status. The Court looked at the total relationship, including control, integration into the business, financial risk, opportunity for profit, and whose business the worker was actually serving.
What factors suggested that Ms. Cooper was an employee rather than an independent contractor?
The Court relied on several factors, including that Ms. Cooper was integrated into GFI’s management structure, reported to the company’s principals, had employees reporting to her, used equipment and software paid for by GFI, could not substitute others to perform her work, and had little financial risk or independent opportunity for profit.
Can a dependent contractor still be entitled to reasonable notice?
Yes. The Court held that even if Ms. Cooper had not qualified as an employee, she would at minimum have been a dependent contractor because of the long-term and economically dependent nature of the relationship. On that basis, she would still have been entitled to reasonable notice.
When can aggravated damages be awarded in a wrongful dismissal case?
Aggravated damages may be awarded where the employer acts in bad faith in the manner of dismissal and that conduct causes mental distress beyond the ordinary upset of losing a job. In Cooper, the Court found the employer’s conduct misleading, unfair and unduly insensitive, particularly because serious performance allegations were raised only after termination and after Ms. Cooper sought compensation.
Do you need medical evidence to prove aggravated damages?
Not necessarily. The decision recognized that medical evidence is not essential, but there must still be evidence showing harm that goes beyond normal disappointment or distress from termination. Ms. Cooper testified to significant anxiety, sleep disruption and ongoing mental health effects, and had sought counselling. The Court awarded $30,000 in aggravated damages.