Temporary staffing agencies and companies like ADP, Ceridian, People 2.0, etc. process pay for thousands of people every year, so we are under a lot of scrutiny from the Canada Revenue Agency (CRA) to ensure we are doing everything above board and according to the Employment Standards Act. If you work for a staffing agency (or a company directly) as an independent contractor by setting up your own corporation or company to work under, you, the agency, and the workplace will also be under CRAs scrutiny and more at risk of being financially audited when you file your taxes.
What is an independent Contractor?
Independent Contractor (IC) workers tend to have significant control over their work, including how, when, and where the work is done. Jobs paying less than $40-$60 an hour are generally NOT considered eligible for Independent Contractors, and will greatly increase the chance of a financial audit.
This is how the CRA will decide if a job is in fact suitable for Independent Contractors:
- Control over Work: Independent contractors usually have significant control over how, when, and where they complete their work.
- Compensation: Jobs paying less than $40-$60 per hour are often NOT eligible for independent contractor status and may receive more CRA scrutiny.
- Tools and Equipment: The worker provides all or most of the tools and equipment required for the job.
- Decision-Making: The worker decides how the task is completed.
- Work Schedule: The worker sets their own working hours.
- Benefits: The worker is not entitled to employee benefits like unemployment insurance or workers’ compensation.
- Vacation Pay: Independent contractors do not receive vacation pay.
- Expenses: The worker covers their own expenses related to the job.
- Payment: The worker is paid for completed work, typically at the end of the job, on a pre-determined basis.
- Invoicing: The worker submits invoices to the client for payment.
- Client Selection: The worker can accept or reject work and may have multiple clients.
- Subcontracting: The worker can hire someone else to complete the work.
As you can see, most of the assignment jobs through a staffing agency/temporary agency would NOT qualify for Independent Contractors. If someone works as an IC when the job doesn’t qualify, the worker, the agency, and the company they did the work for will be on the hook to pay back any unsubmitted/undeclared taxes, employment insurance, workers compensation, and expenses etc. when CRA audits them.
More info available here:
https://canadianpayrollservices.com/what-is-worker-misclassification/
