Workers are usually categorized as an employee or a contractor. Each category comes with its own distinct set of entitlements and obligations. Generally speaking, a contractor is someone in business for themselves, while an employee works for the benefit of another’s business.
Misclassification of workers is a significant issue, and it exposes both sides to potential liability. “Deciding” whether to treat a worker as an independent contractor or an employee is not as simple as asking them how they want to be paid; courts and the Canada Revenue Agency will look beyond how the parties characterize the relationship and assess its true nature.
Employee misclassification is a common issue in employment law that can result in significant financial consequences to the employer. Specifically, an employer may expose themselves to liability under the applicable employment standards, including in relation to unpaid wages, overtime pay, vacation pay, termination pay and Canadian Pension Plan and Employment Insurance contributions if a court finds that an employee’s role has been inappropriately classified.