Key points:

1.       If a business provides you with their own tools and equipment to do their work, you’re considered employee. But, in case of contractor, you have your own tools and perform with them to complete the job given.

2.       For employees, there pay is same and can’t be changed, no matter how good or bad they are at their job. But for contractors, your work defines everything, so you make profits if you are good in your work, and vice versa.

3.       Employees can not assign their work to someone else. But contractors are their own boss, so they can assign tasks and duties to their teams.

Rules:

1.       There is a rule for Contractors, in which the contractors receive a form named 1099, which then is reported to IRS as the amount of money the contractor earned.

2.       Contractors don’t have access to benefits and incentives like employee does.

3.       A contractor can have benefit of paying less tax, as they can claim their business expenses as deductions from taxes. Employees don’t have any benefits for paying the taxes.

Consequences:

·         Termination notice: In case of Employee, you should be careful as an employer that why and how you are terminating the employment. If you terminate a person perceiving him/her as a contractor, and later, the law comes to know that he was actually an employee, the employer could be faced with wrongful dismissal suit for not giving notice of termination.

·         WSIB: The Workplace Safety Insurance Board is a body providing compensation coverage to employees if they get hurt in work. If the employee is misclassified as a contractor, he won’t be receiving the coverage. But, if this gets proven true, the staffing agency is then liable for paying the worker’s compensation, penalities, premiums.