Misclassified as an Independent Contractor in Ontario?
Calling you a contractor does not make you one. Many contractors are employees or dependent contractors in law, and may be owed severance, vacation, and overtime.
Key takeaways
- Calling you an "independent contractor" does not make you one. Courts look at the substance of the relationship, not the label.
- Many contractors are really employees or dependent contractors in law, with real entitlements.
- A dependent contractor (economically reliant on one client) is owed reasonable notice on termination, like an employee.
- Misclassification can mean you are owed severance, vacation pay, overtime, and ESA protections.
- "Contractors get nothing when the contract ends" is a myth.
In this article
Plenty of people are hired as "independent contractors" who are, in the eyes of the law, really employees, or something in between. The label on your contract does not settle the question, and getting it wrong can cost you severance, vacation pay, and other entitlements you never knew you had.
✅Quick answer. In Ontario, your real legal status is decided by the substance of the relationship, not the word "contractor" in your agreement. Courts weigh how much control the company has, who owns the tools, your chance of profit or risk of loss, and how integrated you are into the business. Many "contractors" turn out to be employees or dependent contractors, both of whom can be owed reasonable notice and other entitlements when the work ends.
Does being called a contractor mean you have no rights?
No. Employers cannot avoid their obligations simply by writing "independent contractor" into an agreement. If the working relationship looks like employment, the law treats it as employment, regardless of the label, the invoices, or the fact that you have a business number.
How do courts decide if you are really an employee?
Courts look at the real working relationship, weighing factors such as:
- Control: how much the company directs how, when, and where you work.
- Tools and equipment: whether you or the company own what you use to do the job.
- Chance of profit and risk of loss: whether you run a genuine business with financial risk, or simply earn for hours worked.
- Integration: whether your work is woven into the company's operations or is a truly independent service.
Employee, dependent contractor, or independent contractor?
There are three categories, not two. A true independent contractor runs their own business and serves many clients. An employee works for one employer under its direction. In between sits the dependent contractor: someone who is technically a contractor but works mostly or exclusively for one company and is economically dependent on it. That middle category matters a great deal on termination.
What is a dependent contractor owed?
Reasonable notice. Ontario courts have recognized that a dependent contractor, because of their economic reliance on one client, is entitled to reasonable notice of termination, much like an employee. Cases such as McKee v. Reid's Heritage Homes (2009) and Keenan v. Canac Kitchens (2016) confirmed that long-serving, economically dependent contractors can be owed substantial notice when the relationship ends.
What can you claim if you were misclassified?
If you were really an employee or a dependent contractor, you may be owed severance (reasonable notice), unpaid vacation pay, overtime, and the protections of the Employment Standards Act. There can also be implications for CPP, EI, and tax. The starting point is to have your actual relationship assessed against the legal tests, not your contract's label.
If your contract was ended and you were told you get nothing because you were a contractor, that may be wrong. See how notice is built in our guide to severance pay in Ontario and what a wrongful dismissal claim involves, or get a free review of your situation.
Frequently asked questions
Can I be owed severance if I was an independent contractor?
Possibly. If you were really an employee or a dependent contractor in law, you can be owed reasonable notice on termination, regardless of the contractor label. Courts look at the substance of the relationship.
What is a dependent contractor?
Someone who is technically a contractor but works mostly or exclusively for one company and is economically dependent on it. Ontario courts treat dependent contractors as entitled to reasonable notice when the relationship ends.
How do I know if I was misclassified?
It depends on the real working relationship: how much control the company had, who owned the tools, whether you had genuine business risk, and how integrated you were. A label of contractor does not decide it. Have it reviewed.
What can I claim if I was misclassified as a contractor?
Potentially severance (reasonable notice), unpaid vacation pay, overtime, and ESA protections, with possible CPP, EI, and tax implications. Get your actual status assessed against the legal tests.
Priya Sharma
Legal Writer, Mirza Law
Priya Sharma is a legal writer at Mirza Law in Toronto. She writes about wrongful dismissal, workplace rights, and what Ontario employees can do when they are treated unfairly.
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