Employee or Contractor? Apply the Duck Test...

BY SIMRAN BAKSHI, ASSOCIATE LAWYER

How do Ontario Courts determine if someone is really a contractor or an employee?

It may surprise you to learn that the answer is actually quite simple and straightforward.

Just apply the duck test: If it looks like a duck, swims like a duck and quacks like a duck, then lo and behold, it probably is a duck. 

In other words, if the “contractor” works like an employee, is managed like an employee, and overall appears to be like an employee, chances are this “contractor” is actually an employee under Ontario employment law.

As the Supreme Court of Canada perhaps more eloquently summarized:

47      Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra.  The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account.  In making this determination, the level of control the employer has over the worker’s activities will always be a factor.  However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.

While an employer may have many cost incentives for prefering to work with a contractor rather than an employee (some being of dubious legality), denying a worker the protections and entitlements that come with employee status can be a very costly mistake for both employer and employee. 

We often hear our employer clients say, "but we agreed in writing that this person would work with us as a contractor", to which we just as often have to respond, "unfortunately given the nature of your working relationship, this contracting agreement is probably not legal or binding." 

It is not enough to simply call someone a contractor.  For the contracting relationship to be legally binding, the very essence of the working relationship itself needs to have the markings of independence and exclusivity. 

Perhaps our best advice to our employer clients is to start from within, by frankly considering how a worker is likely perceived within the company itself.  If there is a degree of control, dependency and answerability, it is quite possible that this individual is an employee, no matter what you call him or her, and has legal status as an employee that provides for numerous employment  entitlements, and entitlements upon termination of employment and wrongful dismissal. 

- Simran Bakshi, Associate Lawyer Toronto

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