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Employee or independent contractor? Can you spot the difference?

Trevor R. Thomas

Co-Founder + Partner
May 26, 2021

Why is it important to be clear whether someone is an employee or independent contractor?

Determining whether a worker is an employee or independent contractor can be challenging, but it is an important consideration in operating a business. The challenge is that it is often not entirely clear, based on an assessment of the facts, whether someone is an employee or contractor. However, the importance in going through this assessment is that employees are entitled to the minimum standards in the Employment Standards Act, whereas independent contractors are not. 

In a recent decision from the Employment Standards Branch, we successfully defended our client, a company specializing in facilitating the delivery of consumer goods, from several complaints from its workers claiming they were employees rather than independent contractors.

The factors used to determine employee or independent contractor status

In determining that the workers were independent contractors, the Employment Standards Branch focused its assessment on the following aspects of the relationship:

1.       Control and direction;

2.       Equipment, tools and supplies;

3.       Financial investment and risk;

4.       Opportunity to profit; and

5.       Permanency of relationship.

The Branch found that these aspects of the relationship leaned more towards a contractor relationship than an employment relationship.

The implications of this decision were significant; if the workers were found to be employees, the company would have been financially liable for various violations of the Act. However, given that the workers do not fall under the Act, no liability flowed to the company.

If you are unsure whether a worker is an employee or a contractor, contact us for an assessment of the relationship and how to protect your business from financial liability.