Lawyers for Independent Contractors and Dependent Contractors in the Greater Toronto Area and across Ontario
If you are an independent contractor or a dependent contractor in the Greater Toronto Area or in another city in Ontario and believe that you may benefit from one of the services that Franklin Law provides to independent contractors and dependent contractors, we want to meet with you.
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What is an Independent Contractor?
Independent contractors are workers who are self-employed, are their own bosses, and tend to have greater control over the terms and conditions of their work than most employees. Many workers want to be independent contractors as it provides them with greater: flexibility in choosing schedules, discretion in selecting projects, power in negotiating their rates of pay, potential for profit, and opportunities to develop specialized skill sets, and tax advantages.
According to Statistics Canada’s most recent Labour Force Survey, approximately 13.5% of Ontario’s total employed workers work as self-employed. Industries with a high number of workers working as self-employed include:
- Agriculture (58%)
- Professional, Scientific and Technical Services (32%)
- Construction (28%)
- Business, Building and other support services (28%)
What laws govern Independent Contractors in the Greater Toronto Area and across Ontario?
Independent contractors, unlike employees, do not have traditional labour and employment law protections. Instead, independent contractors are subject to the rigours of commercial law. Certain independent contractors are also subject to certain industry-specific laws, for example independent contractors who work in the construction industry are subject to construction law. Since independent contractors are treated as their own bosses, it becomes their responsibility to comply with laws applicable to them as businesses.
For example: If you are a carpenter who works as an independent contractor, and you renovate kitchens in residential properties. Each time that you enter into a renovation contract with a client, the working relationship, and the contractual terms and obligations between you and the client, will primarily be governed by commercial law and industry-specific construction law that is applicable in Ontario.
What is the difference between Independent Contractors and Dependent Contractors?
Workers often ask us, “What are the differences between dependent contractors and independent contractors?” Dependent Contractors are not employees. At common law, they are actually a subset of independent contractors. In terms of their rights and obligations, they occupy an intermediate status between that of an employee and independent contractor. While all independent contractors, including dependent contractors, are engaged in business on their own account, dependent contractors can be distinguished from independent contractors because they have a close, ongoing, and exclusive or near-exclusive relationship with a single client and rely heavily on that client for their income and financial security. For example, a construction worker who works exclusively or primarily for one general contractor may be considered a dependent contractor of that general contractor. Similarly, an accountant who operates a business on their own account and provides services exclusively or primarily to one client over a legally significant period of time may be considered a dependent contractor.
The term “dependent contractor” is also defined in the Labour Relations Act, 1995 as:
“dependent contractor” means a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor […]
What injustices do Independent Contractors and Dependent Contractors face at work in the Greater Toronto Area and across Ontario?
All workers are at risk of financial exploitation, discrimination, and other mistreatment at work. Independent contractors and dependent contractors are no different. Unlike employees and other workers, independent contractors’ and dependent contractors’ legal rights and obligations are primarily covered by commercial contracts. While there are prohibitions against discrimination in contracts, independent contractors and dependent contractors are not covered or protected by the Employment Standards Act, 2000 or the Labour Relations Act, 1995. Because independent contractors and dependent contractors work independently and less legal protections are available to them, they are often at greater risk of financial loss, clients and customers not paying them, clients and customers exploiting them in other ways, and their businesses and personal reputations being publicly tarnished.
Generally speaking, dependent contractors enjoy all of the rights and opportunities, and are subject to most of the risks and liabilities, that other independent contractors enjoy and are subject to. Depending on the circumstances, a dependent contractor may have enhanced protections in comparison to an independent contractor in at least two ways. First, if a client or customer wants to terminate a dependent contractor’s contract without cause, the dependent contractor is entitled to a reasonable amount of advance working notice prior to the client doing so. In the event that the client fails to provide them with such reasonable amount of advance working notice, a dependent contractor can sue the client in court for compensation in lieu of such reasonable notice (i.e., in much the same way as an employee can sue an employer for wrongful dismissal). The amount of compensation in lieu of such reasonable notice can depend on various factors such as age, service, education, training, skills, etc. Second, the Labour Relations Act, 1995 also gives dependent contractors a right to unionize and engage in collective bargaining as opposed to independent contractors who do not have those rights
Six ways in which Franklin Law helps Independent Contractors and Dependent Contractors in the Greater Toronto Area and across Ontario?
Any experienced independent contractor or dependent contractor will tell you that when disputes arise, it can be legally, financially, and emotionally challenging for independent contractors or dependent contractors to claim payments, avoid losses, protect their reputation, and hold their customers and clients accountable. They will also tell you that the best way to avoid costly disputes with general contractors, home owners, municipalities, companies, and other clients and customers is to ensure that you know your legal rights, ensure that you are aware of strategies that can be used to minimize your legal risks, and ensure that the contractual obligations that matter to you the most (i.e., as an independent contractor or as a dependent contractor) are clearly set out in written contracts that are legally enforceable.
At Franklin Law, we represent all workers. We understand how important it is for independent contractors and dependent contractors in the Greater Toronto Area and across Ontario to act proactively in maximizing business opportunities and minimizing legal risks, and how vulnerable they can be when working relationships with their clients break down or projects do not go as planned. We know that independent contractors and dependent contractors don’t have the luxury of making costly mistakes, we know that it is difficult for them to obtain accurate and timely legal information, and we know that it can be even more difficult for them to find lawyers who they can trust to advise them and represent them when they are most in need of help and are most vulnerable.
The Independent Contractor Lawyers and Dependent Contractor Lawyers at Franklin Law fill an important need in the small business community in the Greater Toronto Area and across Ontario. We provide valuable guidance, legal advice, and legal representation to independent contractors and dependent contractors – accessible support, advice, and representation that helps these workers to comply with the law, protect their assets, protect their business interests, and protect the interests of the employees and other workers who rely on them for their livelihoods.
Some of the services that Franklin Law’s Independent Contractor Lawyers and Dependent Contractor Lawyers routinely provide include:
1.0 Advice on Legal Structure
An independent contractor or dependent contractor needs to choose the legal structure for their business that best meets their unique needs. The right legal structure can be key in limiting liability when the work does not go according to plan. We can provide you with legal information about whether or not a sole proprietorship, corporation, or partnership is the best fit based on your business goals, your risk appetite, and tax implications.
2.0 Contract Review and Drafting Services
A well-drafted and legally enforceable independent contractor agreement or dependent contractor agreement can go a long way in preventing any misunderstandings or disputes between independent contractors or dependent contractors and their clients. This is particularly true with respect to scope of work, timelines, quality of work, payment terms, and other aspects of the client-contractor relationship in which things frequently do not go as planned. We can help you in drafting or reviewing your independent contractor agreements or dependent contractor agreements so that your interests are better protected in the event of a dispute with a client.
3.0 Registering and preserving Construction Liens
The Construction Lien Act provides independent contractors and dependent contractors who provide services in the construction industry with special rights that enable them to “place a lien” on a property in situations in which they have supplied their labour and/or materials to improve that property. This typically applies to independent contractors whose services include painting, carpentry, electrical, plumbing, roofing, plastering, general home renovations, landscaping, etc.
When a contractor or sub-contractor is not paid for their work or materials, they can register a construction lien. Once that lien is registered, it creates a legal claim against the property, making it difficult for the property owner to sell or refinance the property without first paying the lien claim. The fear of having a lien registered against their property provides most property owners with a powerful incentive to pay outstanding amounts or debts promptly.
One of the challenges that most independent contractors and dependent contractors face is navigating the steps necessary to register and preserve a construction lien. There are strict timelines and other requirements under the Construction Lien Act that independent contractors and dependent contractors must comply with and a failure to do so can have disastrous consequences. For example, a contractor usually has 60 days from the last day that they worked on the property or the day on which their contract was terminated or abandoned to preserve a lien. Because Franklin Law’s Independent Contractor Lawyers and Dependent Contractor Lawyers have experience navigating these time limits and other legal requirements, we can help you to register a lien on a client’s property so that you can secure payment for the time and materials that you have invested and have the peace of mind and comfort to focus on other work that you do the best.
4.0 Independent Contractor-focused and Dependent Contractor-focused Dispute Resolution and Litigation
Independent contractors and dependent contractors in the Greater Toronto Area and across Ontario often get into disputes with their clients over matters such as non-payment for services or materials, unilateral termination of the contract, rejection of materials, and breach of contract more generally.
It is always prudent for independent contractors and dependent contractors to try to resolve any such disputes through negotiation or mediation, and Franklin Law’s Independent Contractor Lawyers and Dependent Contractor Lawyers are experienced in helping independent contractors and dependent contractors to fully explore settlement opportunities before commencing a legal action or lawsuit. However, when settlement efforts prove unsuccessful, litigation may be necessary to protect contractors’ rights and/or recover unpaid compensation.
The truth is that, even in the best of cases, litigation (i.e., a lawsuit) can be very complex and very risky. While independent contractors and dependent contractors can commence and represent themselves in litigation, it is often helpful for them to retain a law firm that is unapologetically committed to protecting contractors’ interests. Franklin Law understands that reality, and when attempts to settle a dispute fail, we are one of a few law firms in Ontario that are ready and able to represent all workers – including independent contractors and dependent contractors – in court or at arbitration.
5.0 Cases of Employee vs. Dependent Contractor vs. Independent Contractor Misclassification
The answer as to whether or not a worker is an employee, dependent contractor, or independent contractor does not solely depend on the ways in which the parties describe themselves or describe their working relationship. To answer that question correctly, one must consider a number of factors that the courts have refined over a number of years. Those factors seek to determine, among other things, whether or not the worker is in business on their own account pursuant to a “contract for service” (i.e., an independent contractor), whether or not there is a relationship of economic dependency between the worker and a specific client, and whether or not the worker is working as an employee for a business pursuant to a “contract of service” (i.e., an employee). For example, the following questions and considerations are likely to figure prominently in a court’s determination of whether or not a worker is an independent contractor or an employee:
Who has control? Independent contractors have control over the work they do and how they do it. They are not subject to the same level of control as employees, who are directed and supervised by the employer.
Who owns the tools and equipment? Independent contractors typically own and use their own tools and equipment to perform their work.
Who bears the risk of loss? Independent contractors are responsible for their own business expenses and bear the risk of loss if a project does not go as planned.
Who has the opportunity for profit? Independent contractors have the opportunity to make a profit or loss on a project, depending on how efficiently they complete the work.
Is the worker integrated into the client’s business? Independent contractors are not integrated into the company’s operations in the same way as employees. They are generally hired for a specific project or period and do not participate in the day-to-day operations of the company.
The answers to these questions can have serious implications for workers’ legal rights and obligations. Whereas most employees are entitled to minimum wage protections, sick leaves, parental leaves, and other leaves, vacation pay, vacation time, public holiday pay, restrictions on hours of work, termination pay, employment insurance benefits, and severance pay, the same cannot be said of most independent contractors and dependent contractors. Whereas dependent contractors are generally entitled to a reasonable amount of advance working notice of a client’s intention to terminate a contract, the same cannot be said for most independent contractors. Similarly, whereas independent contractors and dependent contractors can structure their businesses in tax advantageous manners and write off expenses, most employees do not have that flexibility or discretion.
Franklin Law’s lawyers are well positioned to help workers understand whether or not they are likely to be classified, or whether or not they have been misclassified, as independent contractors, dependent contractors, or employees, and understand the opportunities and risks that flow from each such classification. For example, where an employee has worked for an employer but was wrongly classified as an independent contractor, Franklin Law may be able to help the employee seek compensation for certain employment-related entitlements like vacation pay, public holiday pay, termination pay, and severance pay in the courts or through the Ministry of Labour. As a further example, if the Canada Revenue Agency (CRA) rules that a worker was an employee instead of an independent contractor, should not have written off certain expenses, and must pay their portion of unpaid employee insurance premiums going back several years, and that worker wants to challenge the CRA’s rulings, Franklin may be able to challenge the CRA’s ruling and help the worker to retain their independent contractor or dependent contractor status.
6.0 Ongoing Legal Support and Workshops for Independent Contractors and Dependent Contractors
Workers who provide their services as independent contractors and dependent contractors are required to make business and legal decisions that can have serious implications for their interests. For example, independent contractors and dependent contractors frequently have to review sub-contractor agreements (in cases in which they are hired as a sub-contractor on a project), structure invoices, decide upon timelines for payment, register business names, register trademarks, etc.
Any experienced independent contractor or dependent contractor will tell you that you can’t “know everything”. Probe a little deeper, and they’ll tell you that it is important to “know what you know” and even more important to “know what you don’t know”. Franklin Law’s Independent Contractor and Dependent Contractor Workshops were designed with these two interests in mind. Through our workshops, we not only provide basic legal information that every independent contractor and dependent contractor should know, we also provide contractors with insight to important legal opportunities that may not be intuitive and legal risks that may not arise until things go wrong.
In doing so, Franklin Law empowers independent contractors to make decisions regarding their legal options – including whether it makes sense to hire a lawyer or represent themselves in negotiation, mediation, or litigation – in an informed manner with a high degree of confidence. Our Independent Contractor Workshops and Dependent Contractor Workshops are also designed with access to justice in mind and attendees can get access to trustworthy and timely legal information about legal structures, contracts, agreements, liens, invoicing, late payment penalties, intellectual property, dispute resolution, litigation, and other topics at a fraction of the cost that they would have to pay for a series of traditional consultations that might cover the same range of topics.
If you are an Independent Contractor or Dependent Contractor who has faced injustice at work or wants to learn more about your rights, what should you do next?
To figure out what to do next, you need information that you can trust. Now is the time to speak to an experienced Independent Contractor Lawyer or Dependent Contractor Lawyer who understands the issues you face at work, is committed to representing contractors, and knows the strengths and weaknesses of protecting your interests and/or pursuing redress through negotiation, mediation, at arbitration, or in the court. Now is the time to book a Franklin Law consultation or attend one of our Independent Contractor Workshops or Dependent Contractor Workshops.