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Understanding whether someone is an independent contractor or an employee is critical for workers and businesses across Alberta. In these two informative videos, Bow River Law’s employment lawyers share key insights to help clarify these classifications. Below are detailed summaries of each video.
S1 E36: What is an independent contractor?
Speaker: Sarah Coderre, Employment Lawyer and Partner
Introduction to Independent Contractors
In this video, Sarah Coderre explains that an independent contractor is a worker who has significant independence and control over how their work is performed. This includes control over hours, location, tools, and work processes. Independent contractors typically invoice clients or companies for specific services provided, rather than receiving a salary.
Example of an Independent Contractor in Practice
Sarah provides the example of a hairstylist renting a chair at a salon. This stylist:
- Brings their own tools, such as combs, brushes, blow dryers, and specialty equipment.
- Sets their own hours. For example, they can choose to work every Saturday or take weekends off in favor of working later evenings.
- Keeps a portion of the client fee, while another portion goes to the salon.
- Is free to leave the salon and take their tools elsewhere at any time.
Key Differences Between Independent Contractors and Employees
Tools and Control
Unlike independent contractors, employees do not control their tools or working conditions. For example, an apprentice stylist:
- Uses tools provided by the salon.
- Follows a set schedule assigned by salon management.
- Works specific shifts and locations determined by the employer.
- Receives an hourly wage, with the salon keeping additional revenue beyond wages paid.
Autonomy and Flexibility
Independent contractors often have the freedom to work at multiple locations. A stylist could:
- Work afternoon and evening shifts at Salon A during the week.
- Work morning and weekend shifts at Salon B.
- Operate their own side business or provide services from home, as long as commitments to Salons A and B are honored.
The Dependent Contractor Category
Sarah introduces the concept of a dependent contractor. This worker:
- Has some independence, such as setting certain hours or sharing in fee splits.
- Works exclusively or primarily for one organization, creating financial dependence.
- Might have guaranteed hours, a dedicated chair, and secure storage at the salon.
- Relies on one employer for their primary source of income and day-to-day stability.
Why Worker Status Matters
Sarah highlights that a worker’s classification impacts legal rights and responsibilities:
- Independent contractors give up rights such as reasonable notice at termination.
- Independent contractors are personally liable for their own acts of negligence.
- Employees are typically protected from personal liability for workplace negligence. The employer is generally responsible.
- Dependent contractors may be entitled to some employee-like protections, depending on the level of dependence.
Final Tip from Bow River Law
Sarah encourages workers who are unsure about their status to consult an employment lawyer. Proper classification is important because it affects legal entitlements and liabilities in the workplace.
S1 E5: How can I tell if I am an employee or an independent contractor?
Speaker: Amanda Jacinto, Employment Lawyer
Introduction to Worker Classification
Amanda Jacinto explains that worker classification cannot always be determined by what is written in a contract. The real relationship between the parties, as shown by their conduct, is what matters most.
Tests for Determining Worker Status
Degree of Control Test
This test considers who controls the work:
- If a worker sets their own schedule and can delegate tasks, this leans toward independent contractor status.
- If the business dictates the schedule and work processes, this leans toward employee status.
Ownership of Tools Test
This test looks at equipment and supplies:
- Independent contractors typically provide their own tools.
- Employees are supplied with the necessary equipment by the employer.
Integration Test
This test evaluates whether the worker is part of the business:
- Independent contractors operate as separate businesses.
- Employees are integrated into the organization and seen as part of the team.
Why This Determination is Important
Amanda explains that being classified correctly affects entitlements such as severance, overtime pay, vacation pay, and protections under employment legislation. Misclassification can have significant legal and financial consequences.
Need Help Clarifying Your Employment Status?
Bow River Law’s experienced employment lawyers can help you navigate worker classification issues. If you are uncertain about whether you are an independent contractor, dependent contractor, or employee, contact Bow River Law today for trusted advice on employment law matters across Alberta.
Explore more by visiting Bow River Law’s full YouTube channel
Need legal help? Visit our Contact page to speak with our team.
External resource: Review Alberta’s Employment Standards Code to review statutory rights. Remember that the common law is outside of the Code, and provides additional rights and protections to employees.
