Why Employment Law Is Critical in Employer-Employee Relationships
Workers are classified into three categories: employees, independent contractors and dependent contractors. You may be legally entitled to certain rights and benefits depending on the category in which you’re classified.
Below, we outline the categories and how the law applies to each. The category you work in may differ from the one you were hired in, the one that is written on your contract or the one you were discharged from. That may mean there is also a difference in your legal entitlements. In such a case, it’s best to contact an experienced employment lawyer to assess and advise you on the specifics of your case.
Employees
Employees are workers who are in a direct employment relationship with an employer. This is the full feast of employment rights with all the trimmings. Employees are typically employed by one massive company, two employers acting as a common employer or even a small employer working under their own name. Whomever the employer is (which is a legal determination) the employer completely controls, among other things, the employee’s conditions and hours of work.
The courts consider several factors when determining who is an employee. Those factors include:
- Whether or not the individual exclusively provided services to the company;
- The degree of control the company had over the individual’s work;
- Whether the individual was required to supply their own tools and equipment;
- The degree of risk taken by the individual (e.g. their chances for profit and risk of loss); and
- The degree of integration between the individual’s activities and the company’s business.
The Canada Labour Code (CLC) at the federal level and the Employment Standards Act (ESA) in Ontario govern employee-employer relationships. Given the employee-employer power imbalance, the legislation is geared toward the benefit and protection of employees. It grants employees several rights, including various job protected leave of absences and vacation pay/time.
On an employment relationship’s termination without cause, employees are entitled to notice of dismissal, payment in lieu of notice and/or severance.
Independent Contractors
Independent contractors – or simply “contractors” – are engaged by companies under a limited contract for services. Contractors run their own businesses or self-employed, may have multiple clients or employers and are responsible for filing their own taxes amongst other legal and financial obligations.
Unlike employees, contractors have more freedom to operate than employees, as the business has limited authority to dictate how a contractor completes a job. As a result of this increased autonomy, contractors are not entitled to the benefits or protection employment laws generally provide.
Dependent Contractors
Dependent contractors (DC) are a recently established class of workers, fitting into neither the employee nor contractor category. DCs sometimes rely on one primary employer or ‘client’ for majority of their income. These are workers who, although legitimately self-employed, earn all or the majority of their income from a single client. To define a dependent contractor, the courts consider factors such as:
- Whether the worker works all or mostly for one employer;
- Whether the time, place, and nature of the worker’s work are controlled by the employer;
- Whether the worker owns the tools that they use in the course of their work for the employer;
- Whether the worker has taken on risk in relation to the employer’s business, such that the worker has a direct stake in the success or failure of the business; and
- Whether the worker is integrated into the employer’s business (or, in the alternative, operates an independent business in the service of the employer)
Legislation that governs employees does not governs Dependent Contractors, but they are entitled to make a claim for wrongful dismissal. Unlike independent contractors, dependent contractors may be entitled to reasonable notice or pay in lieu of notice on termination of an employment relationship.
Worker Misclassification
Employers often misclassify workers – in some instances erroneously, in others, intentionally. Sometimes, employers try to avoid costs and deny employees benefits and protection the law guarantees.
For example, John Deer entered a “independent contract for services” relationship with Canada company Inc. on Project Humongous as an IT worker. During his tenure, the contractor-employer relationship changed when John Deer began working exclusively for Canada Company Inc, starting introducing himself as an agent of the company and used the vehicle and computers provided by the company. If John Deer was classified as a contractor yet performs the exclusively for the company, deriving a majority of his income from Canada Company inc., it may be a case of worker misclassification.
Whether you are classified as an employee or a contractor, each category is treated differently by law.
If you have concerns about your job classification, you can contact an employment lawyer. You can also find information online at the Government of Ontario’s website (jobs and employment).
Your Employment Lawyers in Toronto
If you are an employee misclassified as an independent contractor, contact Lecker & Associates. Our experienced employment lawyers are ready to assess your case, advise you on the best course of action and ensure you receive the benefits you deserve.
Call us at 416.223.5391 or complete our contact form to request a consultation.
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