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.