Are you A Contractor or An Employee?
Updated: Sep 9, 2021
Contractors and Employees have completely different employment law entitlements and protection. You want to be sure what you are getting yourself into before accepting the job offer. Read below to learn more.
Why Does It Matter whether I Am An Employee or A Contractor?
Contract workers are subject to statutory employment rights (Occupational Health and Safety Act (OHSA), Human Rights Code (the Code)), but they are not protected under the Employment Standards Act (ESA), Not entitled to Employer-employee legal jurisprudence based on the common law, Not entitled to employment legislation
Employer-employee legal jurisprudence based on the common law.
To put it another way, a contract worker CANNOT sue for wrongful termination or claim reasonable notice. When terminating a contract worker, all that is required of the employer is to notify the employee that the contract employment has come to an end.
Supreme Court Decision on Misclassification
As shown in Heller v. Uber Technologies Inc., 2019 ONCA 1, an employee being misclassified as an independent worker is always a major concern. The Supreme Court of Canada affirmed the Court of Appeal's decision in 2020 SCC 16, holding that Uber's arbitration clause was unconscionable and consequently unlawful. The Supreme Court, unfortunately, did not consider the question of missclassification. However, it established the legal precedent that if certain circumstances are met, even if you signed an independent contractor contract or were employed as an agent or broker, you will be regarded a "employee" and entitled to employment law benefits reserved for employees.
Legal Test for Misclassification
The Legal Test for Misclassification has 4 elements: 1) Control; 2) Ownership of tools & the cost of using the tools; 3) Chance of profit / risk of loss; 4) Economic dependency & Integration.
The more control the firm has over its independent contractor, the more probable it is that an employment relationship will be found by a Court in an employment law setting. When employees buy or rent equipment or huge instruments that require significant upfront expenditures and ongoing upkeep, it typically suggests that they are self-employed. The more the independent contractor is protected from loss and the more financially dependent he or she is on the payor, the more likely he or she will be classified as an employee under employment law.
It is not exactly one size fits all equation to determine who is an employee and who is a contractor. An Employment Lawyer Consultation is highly recommended.