Employee or Independent Contractor?

In Ontario, there is no specific formula for determining whether you are actually an “independent contractor” or “employee.”  This can make it very difficult to know precisely what your rights, entitlements and options as a worker, in the event of a dispute with your company.

Whether a worker is an employee or independent contractor has important implications on their employee legal rights. For example, an employee enjoys many more legal rights under Ontario employment law, including minimum wage, overtime pay, public holidays, notice of termination, and vacation pay.

On the other hand, an independent contractor is not entitled to employment law protections, as they are deemed to be in business for themselves (much like “freelance workers”). Put simply, independent contractors are considered to be operators of their own business, providing a contract for service to multiple clients. As such, independent contractors, are self-employed and act as their own “boss”. This provides the independent contractors with significant control over their schedule and duties, unlike employees who use an employer’s schedule, tools and equipment, workplace policies and procedures, and are on an employer’s payroll.

In theory, the difference between an employee or independent contractor can appear simple to discern. However, in practice, this distinction can be difficult to identify because some workers do not fit neatly into one specific category. To classify workers, courts in Ontario typically examine the “total relationship of the parties” to determine the true status of a worker and who maintains “control” over the entire relationship. In fact, courts have held that how a contract describes a worker (“employee” or “independent contractor”), while relevant, is not determinative of a worker’s status. If it was, employers could easily abuse their responsibilities to workers by simply including asking them to sign a legal document called “independent contractor” instead of an employment contract, in order to deprive employees of their legal rights. 

If you have any questions about whether you (or one of your workers) may in fact be an employee at law, contact Bune Law. An experienced Ontario employment lawyer can help you with this very important issue by reviewing your independent contractor/employment agreement, or defending your position of being an employee or independent contractor.