In British Columbia, the classification of workers as employees, independent contractors, or dependent contractors carries legal implications which can be hugely significant to employers and workers alike. While employees and independent contractors are widely known and understood the category of workers, dependent contractors occupy a unique position in the realm of employment law and are often not understood by the public at large.

What is a Dependent Contractor?

Dependent contractors are workers who are in an employment relationship with a business that falls somewhere between that of an employee and an independent contractor. Unlike independent contractors, who maintain a higher degree of independence and control over their work and often have multiple clients, dependent contractors often work exclusively or primarily for one business and rely on that business for a significant portion of their income, if not all of it.

Under British Columbia employment law, dependent contractors are entitled to certain rights and protections that are not extended to independent contractors. While they may not have the same level of job security and benefits as employees, dependent contractors are considered to be economically dependent on the business they work for and are therefore afforded some legal protections, including severance pay. They may also be entitled to other benefits, such as workers’ compensation coverage, depending on the nature of their relationship with the business.

Importantly, dependent contractors in BC are protected from wrongful dismissal. This means that businesses must provide dependent contractors with reasonable notice of termination or severance pay in lieu of notice if their relationship is terminated, unless there is just cause for immediate termination.

How to Tell if You Are a Dependent Contractor?

Determining whether or not a worker is a dependent contractor can be a complex and fact-specific analysis. The courts and tribunals in BC consider a variety of factors when assessing the nature of the relationship between the worker and the business. Some of the key factors include:

• the degree of control exercised by the business over the worker
• the level of integration of the worker into the business
• the exclusivity of the relationship
• the extent to which the worker relies on the business for income
• if the worker uses their own equipment in providing their services

One of the key distinctions between independent contractors and dependent contractors lies in the degree of control exercised by the business over the worker. Dependent contractors are typically subject to a higher level of direction and control from the business than independent contractors. This control may manifest in various forms, such as set work hours, specific tasks and duties, and supervision by the business.

You Need More Than a Label

Employers in British Columbia should be mindful of the legal implications of misclassifying workers as dependent contractors. Many employers prefer to engage the services of workers as contractors because they think it will save them money in the long run. However, simply labelling a worker as an independent contractor through a contract or when you communicate with them does not make it so. In deciding the issue courts and tribunals will look into the substantive relationship and arrive at their own conclusion as to whether or not a work is a dependent contractor or not.

Misclassifying a worker as an independent contractor when they really are a dependent contractor could lead to serious legal consequences for a business, including liability for severance, and other entitlements. These amounts could be potentially very significant if the worker has been with the business for a long time.

If you have a legal question regarding dependent contractors contact our experienced employment lawyers today for a consultation.