If you do not properly classify your relationship, you risk violations with Revenue Canada and the Workers Compensation Board. There are four key factors to consider in classifying a worker as either an employee or an independent contractor. These factors are more important than the title of the contract. A person may be classified by Revenue Canada as an employee of a business even if both parties involved never intended that result. The greater the control over the worker, the more likely it is that the worker is an employee.
Control refers to how, when and where the services are to be performed.
An independent contractor is given a description of the work to be done and then is left to complete the work independently. This refers to whether the worker provides his or her own tools. A worker that provides his or her own tools is more likely to be an independent contractor. If the worker uses the business tools, they are more likely to be an employee. Tools can include such things as machinery, cars, computers, insurance and research materials.