Independent Contractor Misclassification
Often an assumption exists that organizations can get around PEO/GEO services by simply declaring that a person is an Independent Contractor. However, the Canadian government is very strict on who can be classified as such.
When labelled as an ‘Independent Contractor’ the worker does not have benefit entitlements, vacation or statutory holiday pay, workers’ compensation/insurance coverage or any other protections that are afforded to employees. The worker is not restricted by borders and can work for organizations outside of their country of work. Although this relationship may seem like a no-brainer to international organizations seeking Canadian talent, it ultimately opens up both parties to unnecessary risk. If caught, the penalties are severe and costly for both the employee and the employer.
At this time, the Canadian government has stepped up its investigation into those who declare themselves to be Independent Contractors. A recent Ontario Ministry of Labour decision found that an Uber courier, who was classified as an independent contractor, did not in fact meet the criteria and was entitled to compensation associated with Employment Standards Act violations.
If you’re unsure of how to classify your workers, try our Independent Contractor vs. Employee Quiz.