Employee or Independent Contractor

Written on behalf of Peter McSherry
Arrows pointing in two different directions to represent the question of employee or independent contractor
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It is often a perplexing and frustrating task to determine if a worker is an employee or an independent contractor.

What is at Stake

The consequences of the worker being an employee is that they are then entitled to the protections offered by numerous protective statutes. This can be of enormous significance to the worker for matters such as minimum wages, vacation and termination payments, human rights and health and safety protections.

If the worker has signed a contract with the suggestion of the relationship being that of an independent contractor, frequently these terms may be unenforceable where they are in conflict with the statutory protections.

For example, a term which gives the company the right to terminate on no notice or minimal notice, such a provision may be of no effect if the worker is determined to be an employee. This would allow the worker not only the minimum statutory notice but also the common law or judge made law compensation for lack of notice.

The Test

To be judged an independent contractor, the issue is the degree of control and ownership of the work equipment. This person should be independent from the company that provides the work. A truly independent contractor “owns” their work, uses their own tools, pays their own taxes, can hire their own subordinate staff, and earn increased profits by controlling their expenses. That is, there is a risk of loss and a potential reward of increased profits.

On the opposite end of the scale, an employee is a person subject to the company’s control in many aspects of his work.

There are, needless to say, many shades of grey in the analysis of the relevant facts.

A Few Real Life Situations

A pizza driver was hired as a contractor. They wear a uniform and drive a vehicle, both of which show the company’s logo. Their hours vary day to day and week to week, however, all shifts are determined by the company. The driver is expected to accept the shifts offered and to be available when requested. They are paid $5 an hour and keep all tips they receive.

The Ontario Ministry of Labour ruled that this person is an employee and entitled to minimum wage protections.

A ride sharing company requires all drivers to provide their own vehicles and their own technology such as phones and supporting software. The workers can come and go as they please. They have no minimum hours. They can drive for competitors and may do so in the course of the same working period. They may elect as they please not to accept offers of available trips.

This fact situation illustrates the problem in predicting the outcome. Uber in fact recently won a court order requiring all such questions of employee or independent contractor be determined by arbitration in Europe.[1]

Educate Yourself on Your Legal Rights

The question of your status as an employee or independent contractor is a complex one. The test is factually driven to understand whether the ultimate control rests with the company. There are also situations, to make this question more confusing, where there may be a “dependent contractor” relationship. If you find yourself head scratching on this issue, get solid advice. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.





[1] Heller v Uber