Worker misclassification disputes are nothing new in the trucking industry. The engagement of owner-operators and other independent contractors who provide things like safety consulting services is commonplace.
For the most part, these non-employee relationships work well, until the contract is terminated with no or minimal notice, and the contractor rethinks their status and claims to be an employee who’s entitled to, among other things, reasonable notice of termination.
For those companies whose employees are subject to provincial regulation, there is an important change to Ontario’s Employment Standards Act, 2000 (ESA). The ESA has been amended, effective Jan. 1, 2023, to provide that, if certain criteria are met, a business consultant or an information technology consultant may be exempt from the ESA. If the criteria are not met, the consultant could be considered an employee.
In these new ESA amendments, a “business consultant” is defined as an individual who provides advice or services to a business or organization in respect of its performance, including advice or services involving operations, profitability, management, structure, processes, finances, accounting, procurements, Human Resources, environmental impacts, marketing, risk management, compliance, or strategy. Safety consultants would be included in this broad definition.
An “information technology consultant” is someone who provides advice or services involving information technology systems — including planning, designing, analysis, documenting, configuring, developing, testing, and installing the business or organization’s information technology systems.
Who is exempt from ESA?
A worker who falls under the definition of a “business consultant” or “information technology consultant” may be exempt from the ESA if all of the following conditions are met:
- The consultant provides services through:
- A corporation, of which the consultant is either a director or shareholder who is a party to a unanimous shareholder agreement OR
- A sole proprietorship of which the consultant is the sole proprietor, if the services are provided under a business name of the sole proprietorship that is registered under the Business Names Act
- There is an agreement for the consultant’s services that sets out what the consultant is to be paid and the amount must be equal to or greater than $60 an hour (excluding bonus, commission, expenses, travel allowances and benefits), or such other amount as may be prescribed, and the compensation must be expressed as an hourly rate
- The consultant must be paid that amount
- Any other requirement as may be prescribed
Come Jan. 1, certain types of consultants who might have been treated as employees will no longer be covered by the ESA, if the requirements are met. Of greater concern is the fact that an independent contractor who does not meet the criteria may be an employee, governed by and entitled to all of the rights and benefits of the ESA.
Companies must review existing independent contractor agreements to determine whether there is a risk that some of their contractors may soon gain employee status, and update those agreements to avoid this outcome.
Even though these amendments come into force on Jan. 1, 2023, the Ministry of Labour for Ontario has not yet released a policy guideline, or any regulation prescribing other requirements.