Changing Workplaces, Changing Classifications: Increasing Relevance Of The Dependent Contractor

The classification of workers has become an increasingly relevant consideration for both hirers and workers in today's rapidly changing economy. Traditionally, workers have fallen into one of two distinct categories for payment in exchange for their labour: employees or independent contractors. These categories are strongly fact-driven and have important legal ramifications for both the hirer and worker, especially with regards to issues such as worker protections, dismissal, human rights, vacation pay, reasonable notice, worker accommodations, and even tax treatment.

A key difference between employees and independent contractors is the fact that employees have less control over their work and the employment relationship than independent contractors. In exchange, employees receive certain workplace protections under both statutory and common law. On the other hand, independent contractors are not entitled to the same legal benefits and protections but have greater latitude over the performance of their duties.

A third subcategory of worker, the dependent contractor, has gained increasing traction in recent years as workplaces continue to evolve. The dependent contractor is another layer of nuance in worker classification, and it's one that employers should be aware of. Unlike independent contractors, dependent contractors are owed reasonable notice upon termination without cause.

The Changing Workplace

While the dividing line between the two worker categories has always presented classification challenges, technological changes and market drivers have significantly shifted the classification landscape. This tension has played out south of the border in the form of legislative changes such as the passage of California's new bill that categorizes gig economy workers as employees and judicial decisions such as a recent ruling in the US Courts that UberBLACK drivers are independent contractors, which is currently the subject of a Third Circuit Appeal. Some have even argued that the binary classification system is not well-suited to the economic realities of the modern workplace in recognition of the fact that some Canadian provinces have already adopted a third category of workers.

In May 2017, the Ontario government released a 419-page report that studied the changing workplace (the "Report"). The Report identified globalization, technological change, and the move to a service-based economy as pressures affecting employers and the demand for...