Independent Contractor – Defining What An Independent Contractor Is

An independent contractor is a person who is in business on their own account. To determine if this is the case, courts consider several factors including the level of control the employer has over the worker’s activities. 

In addition, a worker is more likely to be an independent contractor if:

  • The worker provides their own equipment;
  • The worker hires their own helpers;
  • The worker assumes financial risk in their work; 
  • The worker controls the time, place, and nature of their work;
  • The worker has an opportunity to profit off their work; and,
  • The worker does not exclusively work for one employer.

This list is not exhaustive. Other considerations may also be relevant. 

In Ontario, the legislation does not provide a clear definition of what an independent contractor is. Instead, workers must turn to the courts for a definition. The common law (i.e., judge-made law) definition of “independent contractor” has seen significant development over time. 

Independent Contractors are not Employees

The distinction that independent contractors are not employees is very important. According to the Supreme Court of Canada, the main considerations are control and dependency. The more the worker is subject and subordinate to the employer’s decision-making, particularly where it relates to working conditions and compensation, the more likely the worker is to be an employee and not an independent contractor. 

Sometimes employers want to change the working relationship from an employee to an independent contractor to save themselves a lot of money. For this reason, employers might refer to workers as independent contractors even though they are actually employees. This is called misclassification.

You Cannot Agree to be an Independent Contractor if You’re An Employee

An employee cannot simply agree to be an independent contractor. Likewise, an independent contractor cannot simply agree to be an employee. What the parties call themselves does not determine the question of worker classification. 

Furthermore, if your employment agreement says you are an independent contractor, this does not automatically make you an independent contractor. Despite what your contract says, you may still be an employee entitled to benefits under the Employment Standards Act, 2000.

Incorrectly Working Under An Independent Contractor Agreement May Result in Not Receiving Benefits You Are Entitled

In Ontario, employees have access to the minimum standards provided by the Employment Standards Act, 2000. This includes minimum wage, notice of termination, vacation pay, holiday pay, overtime pay, and other important benefits. 

If you have been working under an independent contractor agreement and as a result have not been getting benefits such as vacation or statutory holiday pay, you should question whether you are truly an independent contractor. If you are instead an employee, you could be owed back pay for all the entitlements that were withheld from you in previous years. 

Of course, the risk of being misclassified as an independent contractor is that it deprives an employee of their many legal entitlements. It is therefore very important to know what an independent contractor is. 

You May Need An Independent Contractor Lawyer To Assist You With Your Situation

If you believe you have been misclassified as an independent contractor and are being treated like an employee or may not be receiving the benefits you think you should be getting, it is highly recommended that you contact an employment lawyer. Monkhouse Law has significant experience in dealing with cases of misclassification. You may be in a situation where your rights are being withheld, and the employment lawyers at Monkhouse Law can assist to ensure you receive all the entitlements you are owed.

This was written by Shane Burton-Stoner, an Employment Lawyer at Monkhouse Law. Monkhouse Law is an employment law firm located in Toronto focusing on workers’ issues. Give us a call at 416-907-9249 or fill out this quick form. We offer a free 30-minute phone consultation.

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