3. How to Structure an Independent Contractor Relationship
a. How to Properly Document the Relationship
Before engaging the services of a worker, an employer should first and foremost consider what relationship it wishes to establish with the worker. The employer should then draft a written agreement that reflects the Wiebe Door factors. Employers who wish to enter into an independent contractor relationship with a worker would be wise to structure the relationship in such a way as to include as many factors indicative of an independent contractor arrangement, and to exclude as many factors indicative of an employment arrangement, as possible. The terms of the relationship should be clearly set out in a written agreement that explicitly states what type of relationship the parties wish to enter into. In the case of an independent contractor, the agreement should be titled “Independent Contractor Agreement” or “Contract for Services” (as opposed to a “Contract of Service”). As previously mentioned, a written agreement between the parties will not be determinative of the relationship, but will nevertheless play a role in establishing the nature of that relationship.
The agreement should also include legally enforceable termination provisions. It may be prudent to limit the independent contractor’s entitlement on termination to the minimums set out in applicable employment standards legislation, to mitigate the risk that an independent contractor may be found to be an employee.
Both the employer and the worker must act within the relationship described in their written agreement. In the event a relationship is assessed, it will not be helpful if the agreement between the parties is titled “Independent 8. Contactor Agreement”, but the parties are behaving as though the relationship is one of employer-employee. The bottom line is, if an employer wishes for an adjudicator to treat its relationship with a worker as an independent contractor relationship, the employer should give the worker as much independence as is reasonably possible, and should treat the worker almost as though he or she were a separate business entity.