Employee Or Independent Contractor?
A Reminder of the Significant Differences from the Federal Court of Appeal
Midwives know that long-term associates are at risk of being seen as employees by government agencies, with all of the financial and legal implications that follow for the associate and the partners. A Federal Court of Appeal decision provides a useful reminder of the risks of such long-term relationships.
In the Connor Homes case, the court examined whether three child-and-youth workers were employees or independent contractors. They worked with two Ontario companies that operated foster and group homes for children with serious behavioural and developmental disorders.
While a contract had been signed identifying the workers as independent contractors, the court held that the intention underlying the contract was not conclusive, and therefore must be viewed in light of the factual circumstances of the relationship.
- Connor Homes exercised control over how the work was performed by requiring that the workers abide by its Policies and Procedures Manual, assigning administrative tasks, requiring attendance at staff meetings and by providing guidance and instruction on managing difficult situations.
- The workers had limited ability to increase their remuneration because Connor Homes controlled the amount of work the workers could perform and arranged their schedules.
- Aside from providing their own vehicles, the workers were not required to take financial risks, take out loans, or make financial investments (e.g., specialized equipment, operating funds).
In light of these factors, the court concluded that these workers were employees, and thus Connor Homes was liable for unpaid CPP and EI premiums. The court’s decision provides a useful reminder of the significant consequences of the classification as independent contractor or employee:
...the proper characterization of a worker’s legal status will impact claims of vicarious liability against the employer organization in tort law, as well as tax matters, labour relations, and worker eligibility and Financial contributions required for social programs, such as Canada Pension Plan and Employment Insurance.
1392644 Ontario Inc. (Connor Homes) v. Canada (National Revenue), 2013 FCA 85 (CanLII).
For midwives, it would also include significant potential liability under the Employment Standards Act. Midwives should be aware of these risks and consider bringing long-term associates into the partnership so as to share management responsibilities, build knowledge and mitigate these risks.