“It depends” is a phrase that can be both frustrating and confusing. When seeking an answer, few things can be as irritating as being told, “It depends.”
With some employers intentionally using the confusion over the difference between an employee and an independent contractor to strip workers of statutory protections and increase their profits, this is an ongoing issue. Many workers are unaware that there is a third category, dependent contractors.
This third category is often difficult to determine. It relies on assessing all the factors in the employment relationship.
For better or worse, some clarity has been added by the Canada Industrial Relations Board ( CIRB). In the recent case of Gee v Corus Entertainment (2023 CIRB 1090), CIRB ruled on how much income you need from an employer to qualify as a dependent contractor.
What is a Dependent Contractor?
With the three classifications, it is important to remember that job title and how the employer classifies the relationship are completely irrelevant to any determination of employment status. Instead, the determination always depends on the specific circumstances. A worker may have some or none of the characteristics listed below but still be found to be in that category. This is why it is critical to get legal advice on this issue.
Employee:
- Definition: An employee is an individual who works for an employer. The employer has significant control over the employee’s work, including how, when, and where it is performed.
- Characteristics:
- Receives a regular salary or wages as well as health benefits.
- Is subject to a high degree of control;
- Only works for a single employer; and
- Required to follow an employer’s policies and regulations.
- Example: Most office workers are employees.
Contractor (Independent Contractor):
- Definition: A contractor is an individual or a business entity engaged to perform specific tasks or projects for a client or employer. Contractors are considered self-employed and operate independently.
- Characteristics:
- Often hired for a specific project or a defined period rather than ongoing employment.
- Provide the tools, equipment, and materials necessary for the job.
- Responsible for their own taxes and typically not eligible for employee benefits.
- Has a high level of control over how the work will be performed, with the client specifying the desired results in general terms.
- There are some specific legal requirements, such as that business or IT consultants must be paid at least $60 per hour before bonuses, commissions, or any other benefits.
- Example: A plumber hired to do the plumbing for a bathroom renovation.
Dependent Contractor:
- Definition: A dependent contractor is a hybrid classification between an employee and an independent contractor. One key distinguishing factor is economic dependence on a particular client or employer.
- Characteristics:
- Economically dependent on one main client or employer.
- May have some degree of control over how the work is performed.
- Example: a plumber who does 90% of his work for a single housing development company.
It’s important to note that the distinction between these classifications can be complex and may depend on various factors, including the degree of control and independence.
Background
Ms. Gee’s relationship with Corus started around 2001, when she first appeared as a regular guest contributor on Corus’s Global News shows. On average, she would often appear on those segments about twice a week.
While Ms. Gee was given free rein over the content and preparation of her segments, Corus had the final say in the topics to be covered in each day’s segment. No formal agreement was signed between the two parties, and Ms. Gee invoiced Corus for $225.00 per appearance. She also worked for numerous other agencies simultaneously, and her work for Corus was about a quarter of her earnings.
Things were going well for Ms. Gee until February 2021, when she was informed that her employment was ending immediately. After 20 years of faithful service and being a constant fixture on their program, Ms. Gee was terminated. The sudden termination left her without notice ( and no payment in lieu was offered) and without an opportunity to bid farewell to her fans.
Following this termination, Ms. Gee brought an application before the CIRB seeking compensation for the lack of notice period following her termination. A key question on whether or not she would be entitled to any such payment would depend on whether or not she is a dependent contractor.
Typically, answering this question involves an extensive exploration of various criteria, such as the degree of control the worker has over their work, scheduling autonomy, and tax withholdings. However, a focal point in this case was determining the percentage of a person’s income a job must meet before someone can be classified as a dependent contractor. After canvassing some case law, the CIRB’s decisive answer to this question was the establishment of a threshold—of 50% of income.
Regrettably, this finding categorized Ms. Gee as a contractor, stripping her of entitlement to notice. The implications of this ruling extend beyond her case, raising crucial considerations for dependent contractors in general.
What does this mean for dependent contractors?
The significance of this ruling lies in the newfound clarity it brings to the test for dependent contractors, setting a firm threshold of 50% income dependence. However, questions still need to be answered regarding how strictly the CIRB will enforce this threshold. It would be absurd for the CIRB to rigidly follow this ruling and deny relief to someone who made 49% of their income from one job. A margin will likely exist, but we will have to wait for more decisions from the CIRB to help clarify whether or not this is the case.
This decision introduces concerns and clarity depending on their income situation for existing workers potentially falling into the dependent contractor category. Those earning over 50% from a single source receive further affirmation of their status. However, for those below this threshold, the 50% requirement may appear daunting, possibly disqualifying them from seeking recovery. This raises concerns about individuals working extensive hours for low pay or depending on multiple jobs, each contributing less to their overall income.
It is also critical to remember that if an independent contractor is terminated, they are still entitled to sue for breach of contract and claim damages.
If you find yourself grappling with uncertainty about your employment status or have questions regarding your dependent contractor classification, De Bousquet PC is here to help. Our team of lawyers is well-equipped to navigate the complexities of your situation, whether it involves deciphering the “it depends” scenarios or pursuing the compensation you rightfully deserve.