Canadian Payroll Reporter

CPR_JUNE_2013v7.qxp:Canadian Employer.qxd 13-05-27 11:50 AM Page 2 JUNE 2013 CRA will 'scrutinize' contractor relationships: Lawyer biggest ones are CPP or QPP in operating independently and should Quebec, EI and Québec Parental seek legal advice if they have any dismissal actions, EI, CPP and Insurance Plan (QPIP), she said. concerns about the arrangement," income tax, regardless of how the "And that's because, according to she said. parties have chosen to characterize the legislation, if the employer was De Grâce suggests payroll profesthe work arrangement, said Carla supposed to treat a worker as an sionals arm themselves with the Nassar, a lawyer at Filion Wakely employee and therefore deduct CPP CPA's guidelines for determining an Thorup Angeletti in Toronto. and EI... then by law the employer is employee's status or the CRA's guide The Canada Revenue Agency now responsible to pay the employees RC4110 Employee or Self-employed? (CRA), "will closely scrutinize these portion plus the employer's portion when they go to an employer to chalrelationships to ensure that it is plus fines for not deducting and interlenge what a worker's status may be. really an independent contract and est." "Oftentimes the powers that be not an attempt to mischaracterize an This can add up. The maximum may challenge the payroll professionemployer-employee relationship," this year for CPP is more than $2,300, al saying, 'No you don't have the said Nassar. which would be doubled if the correct facts,' or, 'Trust us we know A number of employer was what we're doing,' and so this way factors are taken responsible for both payroll can really arm themselves into account when portions. with the actual interpretation of the "It's not the worker, determining "And that's just income tax act," she said. it's the nature whether a worker is for CPP," she said. If a payroll professional fails to of the employment a full-time employee "For EI its another properly classify an employee, she or a contractor. Both isn't likely to be held personally that has to be analyzed." almost $1,250, so the CRA and that type of thing responsible by the CRA. Revenu Québec really adds up, "I would not think that an employhave clear steps and criteria for especially if a company has several of ee could be held personally liable for determining employee status, said these workers that they're treating as the company's contractual relationRachel De Grâce, compliance serself-employed when they really ships," said Nassar. "However, if a vices developer at the Canadian should be treated as an employee." payroll or HR professional is responPayroll Association (CPA) in Having a misclassified employee sible for making deductions or ensurToronto. can also be probing that contracts It's not a matter of an employee lematic when it are properly characbecoming full time after a certain comes to workplace terized, he or she "Worst case scenario, amount of hours working for a particsafety liability, said might be held you could lose ular client, she said. De Grâce. responsible for any your designation." "It really does come down to the If a worker has mistakes by the nature of employment and what's an accident and employer. If an error really important for payroll and doesn't have is discovered, it is organizations to recognize is that it's worker's compensation coverage always a good idea to bring it to the not the worker, it's the nature of the because she was considered a conemployer's attention." employment that has to be anatract employee, but was later deterIn general, it usually is the lyzed." mined to be full-time, then the company's responsibility, said De At a very basic level, if an employcompany could be liable for disability Grâce. er has control over a worker, deterclaims. "Is the payroll professional ever mining their next projects and their The employer opens itself up to litheld personally liable? Not accordtraining, this could point to an igation, said De Grâce. ing to the CRA, not according to employer-employee relationship. Mistakes can be costly, which is actual government liabilities," she There are quite a few repercusone of the reasons Nassar advises said. sions to paying an employee as a asking legal counsel for guidance if The CPA does have a code of contractor when they should have employers are unsure of what type of conduct and it expects its members to been considered full-time, said De relationship they have with a promote the law and be compliant, Grâce. worker. said De Grâce. In terms of fines and penalties, or "Employers should make sure that "Worst-case scenario, you could financial repercussions, three of the independent contractors are actually lose your designation," she said. Continued from page 1 2 Canadian HR Reporter, a Thomson Reuters business 2013

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