Canadian Payroll Reporter

2 News and the protection provided by the terms of employment." The court has not yet ruled on whether it will certify the case. As a result, the allegations have not been proven in court. Payroll professionals know how important it is to properly classify workers as employees or self-employed individuals for federal (and Quebec) source deduction requirements. The correct classification is just as essential when it comes to em- ployment standards laws. When it comes to employ- ees, employers must ensure that their policies for hours of work, overtime pay, minimum wage, vacation pay, statutory holiday pay, paydays, unpaid leaves and termination comply with the minimum requirements in em- ployment standards law (unless the legislation exempts employ- ees from them). Self-employed workers, or independent contractors, do not have these protections. An employment standards board may become aware of a questionable employment rela- tionship through an inspection or because a worker lodges a complaint. If the board finds that an employer has misclassified an employee as an independent contractor, there can be serious consequences. The board could require the employer to pay the individual outstanding vacation pay, statu- tory holiday pay and overtime pay going back a number of months. It could also compel the employer to pay wages in lieu of notice and severance pay, de- pending on the jurisdiction. Properly classifying work- ers can be complicated by the fact that the Canada Revenue Agency (CRA) and employment standards boards may rule dif- ferently on whether a worker is an employee or is self-employed. A ruling by one body does not necessarily bind the other. The Ontario Employment Standards Board's policy and interpretation manual acknowl- edge that the employer-employ- ee relationship is subject to the rules of other laws and the deci- sions of tribunals and courts un- der those laws. "However, those determina- tions have limited application in the context of the Employment Standards Act, 2000 because the purposes of those other statutes are different than the purpose of (the act)," the Employment Stan- dards Act — Policy & Interpreta- tion Manual states. "Therefore, for the purposes of the Employment Standards Act, 2000, the fact that a per- son is, or is not, considered an employee for the purposes of income tax, employment insur- ance, workers' compensation, the Labour Relations Act, 1995 or the Canada Pension Plan is not of great relevance," it adds. The Manitoba Employment Standards Board also holds this position, saying, "Determina- tions made by these other bodies may be taken into consideration, but are not binding for the pur- poses of applying the Employ- ment Standards Code." When determining if a worker is an employee or an indepen- dent contractor, employment standards boards consider a number of factors. While each board adopts its own criteria, the factors used generally come from relevant provincial, federal or Supreme Court case law and previous board rulings. "The courts have developed some common law tests that may be useful, but they must be considered in a manner con- sistent with the definitions and purposes of the Act," the British Columbia Employment Stan- dards Board states. The purposes of the employ- ment standards laws are to "en- sure that employees receive at least basic standards of com- pensation and conditions of employment, to promote fair treatment and open communi- cation between employers and employees, to foster a produc- tive and efficient labour force and to assist employees to meet work and family obligations," the B.C. board states. In its Interpretation Guide- lines Manual: British Columbia Employment Standards Act and Regulations, the B.C. board says it uses a number of common law tests because, "No test is exhaus- tive in exploring the relation- ship. All tests must be examined and considered together." The Ontario board also says it examines more than one test or factor in making decisions. "There is no universal test to determine whether a person is an employee or an independent contractor," it states in its policy and interpretation manual. "The various factors devel- oped by case law...are helpful in answering the central ques- tion: Is the person who has been engaged to perform services performing them as a person in business on his or her own ac- count?" the manual states. Common tests/factors that employment standards boards consider when examining an em- ployment relationship are similar to the ones that the CRA uses. They include: • Control: This factor looks at whether the person/organiza- tion paying the worker is in a position to determine what work is to be done and how to do it. In examining this factor, boards consider issues such as whether the payer has the right to dismiss the worker, control how the worker does the work, and determine how much the worker is to be paid. "Where such control exists, the courts have generally re- garded the relationship as that of an employer and employee," states the B.C. interpretation manual. • Who owns the tools and equipment: Independent contractors are generally expected to provide most of the tools or equipment that they need to do a job, while employers often provide them to employees and are respon- sible for the costs of maintain- ing or repairing them. The Ontario Employment Stan- dards Board points out that the term "tools" can include any item used at the work- place, including telephones, forms, and manuals. "A person who owns all the equipment necessary for the work he or she does is more likely to be an independent con- tractor than an employee. Like- wise, if the tools are supplied by the purported employer, it is more likely indicative of an em- ployee-employer relationship," the Ontario manual states. • Chance of profit and risk of loss: These tests look at whether the worker has a chance to make a profit or risks a financial loss in doing the work for which he or she was hired. "Employees earn wages. They typically do not assume a risk of loss associated with their work or have the chance to make a profit," states the Manitoba Employment Standards Board. "Indepen- dent contractors have full control to maximize profit as a price maker," it states, adding that, "They can see a profit or loss as a result of services pro- vided." • Organizational or integra- tion test: This test considers whether the individual's work is an integral part of the em- ployer's organization or mere- ly contributes to it. "The more integrated the work is with the employer's business, the more likely it is that the person is an employee," the B.C. policy manual states. • Length of relationship: The longer a relationship exists, the more likely it may be an employment relationship. The Manitoba board states that, "Employees often work for the same person or company on a frequent and ongoing basis." By contrast, it says, "Indepen- dent contractors are typically hired to provide a specific ser- vice with a defined end date." The B.C. board also warns employers not to assume work- ers are independent contractors just because they agree to work that way, have more than one job, submit invoices rather than time cards, work without much Canadian HR Reporter, a Thomson Reuters business 2017 April 2017 | CPR Uber suit reveals worker classification critical from EMPLOYEE on page 1 continues on page 7 Examination of an employment relationship can be completed through common tests or factors.

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