Dependent contractor

A dependent contractor sits between an employee and an independent contractor: the person is paid for work or services but is economically dependent on the payer. A buyer meets the term when the target relies on contractors who work for it alone. This entry covers Ontario’s statute and the federal Code; check the rules where you are. See the employee classification risk.

What the statutes say

Ontario’s Labour Relations Act, 1995 defines a dependent contractor as a person who performs work or services for another for compensation or reward on terms that put the person in a position of economic dependence upon, and under an obligation to perform duties for, that other person, more closely resembling an employee than an independent contractor. The Act says “employee” includes a dependent contractor. The federal Canada Labour Code uses similar words in paragraph (c) of its definition, which also names certain vehicle owners and fishers. The federal definition sits in Part I of the Code, on industrial relations.

What to check or ask

• Ask which contractors work mainly or only for the business, and for how long.
• Check how the work is directed and whether the contract speaks to exclusivity.
• Treat tax and payroll status as a separate question; see employee misclassification.