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Good advice.

Good advice.

Going It Alone? 5 Things Independent Contractors Should Know about Employment Law

DBM Law Blog

When you’re a freelancer, an entrepreneur, or an independent contractor—whatever you choose to call it—the defining fact about your employment is that you are your own boss. You’ve broken away from traditional employment models and are going it alone.
But does that mean that along with your timecard and coffee breaks with coworkers, you’ve also given up the rights and recourse avenues available under the Employment Standards Act?
The short answer is: maybe, but not necessarily.
The modern working world is a complicated place. Even if you think your employment situation as a contractor is straightforward, it may not be. For advice on your particular work situation, you can speak to one of DBM’s Langley, Vancouver, or Coquitlam lawyers who specialize in employment law.
Even if you believe yourself to be a contractor and have a signed a freelance agreement with a client, you may actually be considered an “employee”—and be afforded the rights of an employee—in the eyes of the law.
Given the potential for slippage between the categories of “employee” and “freelancer,” especially as more and more of the workforce becomes contractors, you should become familiar with the below employment law facts to ensure all your rights are being met.
1. Independent contractors vs employees
Whether the law considers you to be a freelancer or an employee depends largely on the working relationship you have with your employer or client. If you are an employee, your employer is legally obligated to deduct, contribute, and remit deductions to the Canada Revenue Agency on your behalf. If you are an independent contractor, you are yourself considered an employer, and as such you are responsible for completing these duties on your own behalf.
2. Obligations to contractors vs employees
Employers are responsible for the tax obligations listed above for all employees, and they are also—among many other things—required to pay workers on a regular and recorded schedule, provide sick and holiday pay, give sufficient notice of termination, cover parental and compassionate care leave, and in some cases adhere to the terms of a union.
If you are a contractor, your client’s only obligation to you is to pay the invoice you send them for your goods or services. The sick pay, extended health insurance, and vacation time that is normally covered by an employer is your own responsibility.
3. Employment insurance for contractors vs employees
In addition to covering your own CPP and income tax contributions, as a freelancer you are not able to draw on employment insurance, or EI, in the event you become unemployed, unless you opt into making payments ahead of time. All employees in Canada are entitled to EI payments following termination.
4. When a contractor ISN’T a contractor
It is important to know the rights and roles of contractors vs employees, and the obligations employers have to employees, because even if you are a contractor on paper, you may not be one in the eyes of the law.
If you are not a contractor in the eyes of the law but rather an employee, then your client—considered your employer—must fulfill these obligations under the Employment Standards Act.
Determining whether a person is an employee or a contractor can be confusing for even the most well-intentioned and well-seasoned HR administrator. If you are uncertain about your employment situation, it is imperative you speak with a legal professional. You can contact DBM’s Coquitlam lawyers here.
Although it is complicated, there is a set of parameters you can use to help determine whether you are actually an employee and not a contractor—even if you are “your own boss” and pay income tax, CPP, GST, and expenses out of pocket as a freelancer.
You may be considered an employee, and be granted the rights of an employee, if:

  • All or most of your income comes from one client
  • Your working relationship with the client is continuous
  • Your client sets your hours, your place of work, and/or the type of work you are required to do
  • Your client determines whether or not you can delegate or subcontract work
  • Your client determines whether or not you can hold multiple contracts at once
  • You use tools and equipment owned by your client to do your work
  • You are not fiscally affected by profits and losses

If this describes your employment situation and you have been let go from your contract without fair warning, suffered a workplace injury, or have not been granted vacation or sick pay, you should contact an employment lawyer to go over your options.
5. When a contractor IS a contractor
If you are a contractor both on paper and under the law, you are considered an employer yourself, and therefore your clients aren’t required to meet any of the obligations mandated for an employee.
For freelancers in disagreement with a client—most often over missed or late payment—then the main line of legal recourse for you will be small claims court. You can contact DBM’s Vancouver, Langley, and Coquitlam litigation lawyers to discuss your particular situation and the options available to you.
 

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