As an Employment Paralegal, one of the most common issues I face is confusion from clients over whether they are (or a particular worker is) an “employee,” or “independent contractor.” It is important to understand how workers are classified, and what that means for them in terms of pay rate, benefits, and legal protections upon termination. At SAV Paralegal Services, we can help you to navigate this complex question and which one of these applies to you. Employers must be diligent in properly classifying their workers.
Why is it important?
The entitlements to a reasonable notice depend on this classification. Employees and Dependent contractors are entitled to a reasonable notice while independent contractors are not.
Employees vs Independent Contractors
Courts have relied upon various common law tests for determining the differences between these classes. Despite the tests, it is not always easy to determine the proper classification of any individual worker.
Employees
A worker is still treated as an employee even if they have agreed in writing to be classified as an independent contractor, submit invoices, or use their own vehicle while completing work tasks. If having a contract or submitting invoices does not make someone an independent contractor, what does?
In determining whether a worker is an employee, there is more than one single overriding factor. Each worker’s situation will be viewed independently, and several different factors will be weighed.
A worker may be an employee if some of the following factors describe their work situation:
The employer provides all the tools and equipment needed to perform work duties;
The pay does not fluctuate according to how quickly or how well work is done. For example, the worker is not paid more if a task is finished by Wednesday, instead of Friday;
The employer can discipline or suspend;
The worker is not the one who determine what job tasks need to be completed;
The worker does not set his own rate of pay for his services;
The employer determines the location where work is performed.
If a worker is an employee, then he or she is entitled to all the employment rights and protections found in the Employment Standards Act or Common law. These rights and protections include: minimum wage, overtime pay, vacation pay, protected leave, and notice, or termination pay in-lieu-of notice.
Independent Contractors
Factors that the Court considers in deciding on this issue are similar. The contractor owns or provides the tools and equipment needed to perform the work duties;
The contractor is in business for him/herself. This means that the person has the ability to make a profit (if the work is done quickly, efficiently, or inexpensively, for example) but also takes a risk of losing money (if, for example, the contractor underestimated his costs, or circumstances arise that make the work more expensive than anticipated).
The contractor may be paid more or less money depending on when the job tasks are completed; can subcontract the job tasks.
The employer cannot discipline him, but he could cancel the contract. The independent contractor can work for multiple organizations at the same time and exercises some control in where or when work is done and who performs that work.
Final Thoughts
It can often be difficult to determine how a worker should be classified. There are great differences in these classifications, and those differences can have a huge impact on both employees and employers.
The fact is, the vast majority of workers who are classified by their employers as independent contractors are not in fact contractors and are entitled to a reasonable notice at the Common law. If you are an employee, you are probably not an independent contractor. If you are an employer, that person coming into your workplace everyday is most likely an employee. Regardless of what your contract may say, the Court may decide that the worker is entitled to all the protections an employee may have.
For employees, if you have concerns that you have been improperly classified, contact us as soon as possible. We can go over the specific details of your employment situation and give you advice on which classification is the most appropriate for you. With this information, you will know what rights are due to you while still employed, and at the end of the employment relationship.
For employers, I also recommend speaking to an employment paralegal if you have concerns about the proper classification of your workers. Failure to properly classify workers can result in serious penalties. You may be stuck with large severance payments because your improper classifications caused you to fail to meet the notice requirements. If your workers are properly classified, these are issues that can be specified in a written employment contract. This limits your overall exposure.
If you need help or have further questions, please book your free consultation right here. Our experienced professionals will be happy to assist.
