Understanding employment laws in BC can be tricky, especially when establishing whether you are an independent contractor or whether you are an employee.

It’s becoming increasingly popular for individuals to take on work on a contract basis under their own small business as an independent contractor instead of being tied down to one company and one role.

Independent contractors have the freedom to choose what work they want to do, who they want to work for and the duration of their contract.

But what does this mean for employment laws? Does the BC’s Employment Standards Act protect independent contractors?

Here’s what you need to know.

What is an Independent Contractor?

Independent contractors are essentially considered “self-employed” because they are in business for themselves.

You are typically considered an independent contractor if:

  • you determine what work you perform, where you perform it and how it’s performed;
  • you decide whether you want to subcontract the work to other independent contractors; and
  • you have the opportunity to make a profit (or loss) in your own personal capacity.

What is the Difference Between Independent Contractors and Employees?

Only employees (be it full-time, part-time or casual) are protected and regulated under the BC Employment Standards Act. The Act does not apply to independent contractors.

So it’s worth knowing how to distinguish yourself as an independent contractor to determine whether you are protected under the BC employment laws or not.

Knowing whether you are an employee or independent contractor establishes how you pay income tax, what your legal rights are and how you can enforce them.

Employees Under BC Employment Laws

The BC Employment Standards Act defines an employee as:

  • an individual who performs work according to a job description for someone else (or some entity) in return for a wage payment;
  • the person or entity you perform work for has direction or control over you;
  • the same person or entity trains you to perform the work according to the job description given to you;
  • you receive leave entitlements as part of your job agreement; and
  • you can return to work if you’ve been temporarily laid off (such as in many circumstances with employees during the COVID-19 pandemic).

Independent Contractors Under BC Employment Laws

The Employment Standards Act does not define who falls under the independent contractor bracket.

For example, suppose your workplace directs the work for you and tells you how it should be done but they are your only source of income and working for them takes all of your time? You could fall into the category of dependent contractor. Dependent contractors receive protections from the BC Employment Standards Act.

If you’re an independent contractor, you are less likely to be controlled by the person you are providing work for and more likely to have the freedom to:

  • use your own equipment and tools to complete the work (such as your own laptop or desktop computer);
  • set your own work hours (as long as you are meeting client deadlines); and
  • establish how you want to go about doing the work.

Other factors that could help you determine whether you are an independent contractor or not includes:

  • Do you provide services to more than one client, or are you limited to one client? An independent contractor generally renders services to more than one client.
  • How long have you been providing services to that client? Do you have a long-standing relationship with them? Usually, independent contractors are hired to perform a specific job at a particular time, and it isn’t always an ongoing relationship.
  • Is the work you perform connected to the purpose of the business you’re performing it for? Typically, independent contractors do not form an integral part of the business’s functioning.
  • Do you risk losing money if you don’t perform work? An independent contractor runs their own business, so they risk making a loss if they don’t work. Whereas if you work for an entity, the business’s profit and loss do not affect the job you are required to perform.
  • Does the person or entity deduct income tax from the amount they pay you? Independent contractors are responsible for their own tax bill, so they pay tax only after deducting their expenses. Employers pay tax on their employees’ behalf, and it’s deducted before paying out their wage.

EXAMPLE

Lucy is a freelance graphic designer and was recently offered a job by a company to design their website.
In terms of their contract, Lucy has three months to complete the website design according to the brief. Because of the tight deadline, this is currently the only work she is performing.
Lucy works from home and uses her own laptop and software to complete the job.
The company has offered her a space in the office if she wants more structure, so she is free to come and go as she pleases. She usually works there about two days a week just to get their feedback on the website’s progress.
She is paid per hour.

Lucy is likely an independent contractor because:

  • she controls her hours and when she gets the work done;
  • she has her own tools, so she is not dependent on the tools provided by the company she is rendering services to; and
  • her contract is likely to end after three months.

Key Takeaways

Independent contractors differ from employees because they are not defined in the BC Employment Standards Act and are thus not protected by its employment laws.

However, just because BC employment laws do not cover independent contractors does not mean they are void of any rights as a worker.

For example, there are human rights laws that need to be observed in your relationship with the person or entity you are rendering services to as an independent contractor.

If you have questions about your status, contact us today!