Employment Law

An independent contractor is an individual who operates a business independently, providing services to clients under a contract. In Ontario, there is no statutory definition of “independent contractor”; instead, courts rely on common law principles to determine worker status. Several factors are considered:

• The level of control the employer has over the worker’s activities.

• Whether the worker provides their own equipment.

• Whether the worker hires their own helpers.

• Whether the worker assumes financial risk in their work.

• Whether the worker controls the time, place, and nature of their work.

• Whether the worker has an opportunity to profit from their work.

• Whether the worker does not exclusively work for one employer.

No single factor is determinative. Courts look at the substance of the working relationship, not just the written agreement or job title. Meet our expert independent contractor misclassification lawyer at Affinity Law to resolve your problems.

• In 2023, nearly 2.7 million Canadians were self-employed, representing 13.2% of the employed population.

• Approximately 15% of the Canadian workforce are independent contractors, with the percentage slightly higher in urban centers such as Toronto.

• The median annual pay for independent contractors in Toronto is about $65,900, with a typical range between $53,000 and $82,000 per year.

• Around 8.2% of Canadians aged 15 to 69 engaged in gig work in late 2023, with women and youth more likely to participate in gig work as their main job.

• The most common reason for choosing independent contractor status is the desire for autonomy and control over work hours, wage rate, or location (38.2%).

Ontario’s Employment Standards Act, 2000 (ESA) does not provide a clear definition of an independent contractor. Instead, parties must rely on case law and the evolving common law test.

Recent legal trends in Toronto have shown an increase in regulatory scrutiny and class action lawsuits over misclassification, with courts focusing on the actual working relationship rather than contractual labels.

Our expert independent contractor misclassification lawyers will clarify the complex legislative language for you and help resolve your conflicts.

The distinction between independent contractors and employees is crucial. According to the Supreme Court of Canada, the main considerations are control and economic dependency.

The more a worker is subject to the employer’s decision-making, especially regarding working conditions and compensation, the more likely they are to be considered an employee, not an independent contractor.

Employers sometimes misclassify employees as independent contractors to save on costs such as payroll taxes, benefits, and statutory entitlements. However, misclassification carries significant legal and financial risks:

• Penalties and fines: The Ministry of Labour may audit and impose penalties for misclassification, including back pay for minimum wage, overtime, vacation, statutory holiday pay, and termination/severance pay.

• Legal claims: Misclassified workers can pursue wrongful dismissal claims and ESA claims for unpaid entitlements.

• Tax and payroll liabilities: Employers may be required to pay retroactive CPP, EI, WSIB, and tax penalties.

• Reputational harm: Class action lawsuits and media attention can damage a company’s reputation

Contact our independent contractor misclassification lawyer today to help your business. Schedule Your FREE Consultation with our Independent Contractor Misclassification Lawyer. Click the button below:

A worker cannot simply “agree” to be an independent contractor if, in reality, they function as an employee. The courts and regulators focus on the actual working relationship, not the contract label.

Even if your agreement says you are an independent contractor, you may still be entitled to ESA benefits if you are found to be an employee.

• Loss of ESA benefits such as overtime, vacation, or severance pay.

• No automatic access to Employment Insurance (EI) or Canada Pension Plan (CPP) unless self-enrolled and contributing.

• Potential for back pay if reclassified as an employee by a court.

An employee misclassification lawyer​ can help resolve your conflicts in a smoother way. Meet our independent contractor misclassification lawyer at Affinity Law today. Book your FREE consultation today.

Bill 149: The Working for Workers Four Act, 2024, introduced stronger protections against worker misclassification, with increased enforcement and penalties for employers who misclassify workers as independent contractors.

The Ontario Court of Appeal recently confirmed that independent contractors have a duty to mitigate damages if a fixed-term contract is terminated early, meaning they must take reasonable steps to find new work to reduce their losses.

In a precedent-setting case, a Toronto-area couple misclassified as independent contractors were awarded $125,000 in damages after the court recognized their true employment status.

The law recognizes a third category: dependent contractors. These are workers who, while technically not employees, are economically dependent on one client and may be entitled to reasonable notice of termination.

A well-drafted independent contractor agreement is critical in Toronto, Ontario. Key elements to include are

• Scope of work: Detailed description of services and deliverables.

• Payment terms: Compensation structure, payment schedule, invoicing, and late payment policies.

• Duration and termination: Start/end dates, renewal, and termination conditions.

• Confidentiality and intellectual property: Ownership and usage rights.

• Independence clause: Clarifies non-employee status and responsibilities for taxes/benefits.

• Dispute resolution: Mediation, arbitration, or litigation procedures.

For Employers:

• Do not misclassify employees as independent contractors to avoid ESA obligations.

• Conduct internal audits of contractor relationships.

• Draft clear, accurate agreements reflecting the true nature of the relationship.

• Ensure actual working conditions match the agreement.

• Train HR and managers on legal tests for employment status.

• Seek legal advice when onboarding contractors.

For Workers:

• Review your working relationship and contract.

• Assess whether you control your work and have multiple clients.

• Seek legal advice if you suspect misclassification or are denied entitlements.

Contact our independent contractor misclassification lawyer at Affinity Law to resolve your conflict. We are here to help you in Toronto and the GTA.

If you believe you have been misclassified or are unsure about your status, consult an employment lawyer in Toronto. Legal professionals can review your contract, advise on your rights, and assist with Ministry of Labour audits, claims, or litigation.

Note: This guidance is based on Ontario law and current legal developments in Toronto. Each situation is unique; legal advice should be tailored to your specific circumstances.

Local Expertise: With deep knowledge of Toronto and Ontario employment law, Affinity Law provides solutions tailored to your unique situation.

Client-Focused Service: The firm prioritizes clear communication, practical advice, and effective advocacy, whether you’re a worker seeking justice or an employer seeking compliance.

Proven Results: Affinity Law has a strong reputation for successfully resolving employment disputes and protecting clients’ rights.

If you are facing questions or challenges regarding independent contractor status or worker misclassification in Toronto, contact Affinity Law for a confidential consultation and expert legal support.

Our team is ready to help you understand your rights and obligations and to achieve the best possible outcome for your case. Schedule Your FREE Consultation with our Independent Contractor Misclassification Lawyer. Click the button below: