Is Your Contractor Actually an Employee?

Most Canadian small businesses and nonprofits don't set out to mis-classify workers. You hire someone as a contractor because that's what they asked for, or because it seemed simpler, or because you genuinely believed the arrangement was temporary.

Then CRA comes knocking. Or the worker files an ESA claim. Or a workplace injury happens and your workers' compensation doesn't cover it.

The penalty for getting this wrong is severe: back taxes, CPP/EI premiums, overtime pay, vacation pay, termination notice, and interest — often stretching back three years.

The good news? You can spot the risk in five minutes with this checklist.

How to Use This

Go through each section below. For every statement that describes your worker, check the box — your score updates live as you go. Once you've worked through all five sections, you'll get your overall risk level and a tailored list of next steps.

You Control How They Work

Control is the #1 factor courts look at. The more you direct how work gets done, the more likely that worker is an employee.

You set their hours and expect them to follow a schedule

You tell them how to do the work, not just what to deliver

They work at your location or a place you designate

You require them to attend regular meetings

You review and correct their work process, not just the final result

Section 1: 0 / 5

You Provide the Tools

Contractors own their tools. If you're providing the gear, you're acting like an employer.

You provide their computer, software, phone, or equipment

You pay for supplies, materials, or travel expenses

They use your email, your systems, or your security badges

They do not invoice you for equipment or supply costs

Section 2: 0 / 4

They Have No Financial Risk

Contractors take financial risk. They can lose money on a fixed bid. Employees get paid either way.

You pay them hourly or a regular salary

They get paid even if the project goes over budget

They do not submit invoices — or they do, but you treat them like payroll

You reimburse all their work-related expenses

They get paid for time worked, not for deliverables completed

Section 3: 0 / 5

They Are Part of Your Business

The more integral someone is to your core business, the harder it is to argue they're an independent contractor.

The work they do is central to what your organization sells or delivers

Clients see them as part of your team

If they left, your operations would suffer significantly

They wear your logo, uniform, or brand

You introduce them to others as staff or team members

Section 4: 0 / 5

They Work Only for You

Genuine contractors run independent businesses and are free to serve multiple clients.

They cannot subcontract the work to someone else

They have no other clients

You restrict them from working for competitors

You found them through a job posting, not a business proposal

There is no end date — the relationship is ongoing

You have an employment agreement, or no written agreement at all

Section 5: 0 / 6

⚠ Quick Red Flags

They've worked only for you for more than a year
You gave them a company email address
They report to you in your org chart
You pay them vacation pay or bonuses like staff
You "terminated" them like a contractor but they behaved like an employee

Not sure what to do with your result?

SuperHR works with Canadian small businesses and nonprofits to audit contractor relationships, restructure agreements, and navigate the employee journey — without the cost of a full-time HR department.

Book a Free 30-Minute Call

Book online: bookings.superhrcanada.com/complimentary

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