In Ottawa, and elsewhere in Ontario, the distinction between an “employee” and an “independent contractor” is an important one in employment law. Because the Employment Standards Act (“ESA”) only applies to “employees”, whether you are an “employee” or an “independent contractor” will determine whether you are entitled to minimum employment standards. If an employee is misclassified as an independent contractor, either by mistake or intentionally by the employer, this can greatly impact the employee. Employees to whom the ESA applies are entitled to overtime, vacation pay, and written notice or termination pay in lieu – unlike independent contractors.
Employees and the ESA
Section 1 of the ESA provides the following definition for “employee”:
(a) a person, including an officer of a corporation, who performs work for an employer for wages,
(b) a person who supplies services to an employer for wages,
(c) a person who receives training from a person who is an employer, if the skill in which the person is being trained is a skill used by the employer’s employees, or
(d) a person who is a homeworker,
and includes a person who was an employee;
Section 5.1 of the ESA prohibits and employer from misclassifying an employee as an independent contractor.
The Common Law
In determining whether a person is an employee or an independent contractor, the trier of fact will look beyond labels and consider different factors to determine the actual relationship between the parties. While no one factor is determinative, there are several main considerations which can indicate whether individual is an employee rather than a contractor. These include:
- Who can exercise control or supervision over the individual. This includes such considerations as who sets the work schedule and whether the person is supervised in their work.
- The ownership of any tools or equipment used. Usually, independent contractors have their own equipment, while employers provide equipment or tools to their employees and are responsible for repairs.
- Exposure to financial risks. Generally, an employee will receive salary based on work performed and will not bear a risk for any financial losses of the employer.
Some workers may be classified as “dependent contractors”, meaning that although they are self-employed contractors, most of their income or work is coming from a single source. The courts have held that dependent contractors are entitled to reasonable notice.
Are you an Employee or an Independent Contractor?
If you are unsure whether you are an independent contractor or an employee, of if you have another employment law matter, you can speak to one of our Ottawa employment lawyers today for a free consultation by calling us at (613) 518-2416, or, you can contact us directly here.