Employers are generally familiar with the distinction between an employee and an independent contractor. However, many may not be aware that there is a third category recognized by our courts – that of the dependent contractor.

1. Who is a
Dependent
Contractor?
Heather Hettiarachchi, LLB; MSc; CPHR
IntegritasWorkplaceLaw.com

2. Who is a Dependent Contractor?
Employers are generally familiar with the distinction between an employee
and an independent contractor. However, many may not be aware that
there is a third category recognized by our courts – that of the dependent
contractor.
When placed on a continuum, the dependent contractor falls between an
employee and an independent contractor.
Who is a Dependent Contractor?
A dependent contractor is a contractor that is economically reliant on
one principal.
Regardless of how the parties choose to label the relationship, the
courts will “look behind” the label that the parties have used, to
determine its true nature.
The main factor that a court will consider in determining whether a
contractor is dependent or independent, is whether the contractor is
working predominantly for one principal.
Why should employers be concerned about
Dependent Contractors?
If the relationship between a contractor and the principal is found to be
“dependent”, the dependent contractor must be provided with reasonable
notice of the termination of the relationship. If notice of termination is not
given, a dependent contractor can sue the principal, in much the same way
that an employee can sue his/her employer for wrongful dismissal.
Heather Hettiarachchi, LLB; MSc; CPHR
IntegritasWorkplaceLaw.com

3. Who is a Dependent Contractor?
The following case out of Ontario, shows how costly it can be for an
employer, when an independent contractor is deemed to be a dependent
contractor.
Keenan v. Canac Kitchens Ltd., 2016 ONCA 79
Facts
In this case, Mr. and Mrs. Keenan initially worked for Canac Kitchens as
employees. Then in 1987, Canac Kitchens changed their status to that of
contractors.
As contractors, the Keenans: hired installers; paid the installers money given
by the company; were responsible for damage to cabinets during transit;
and carried their own insurance. Canac Kitchens paid them on a piece work
basis and their pay was not subject to any statutory deductions. Their
agreement did, however, require them to devote their “full-time and
attention” to Canac Kitchens.
Between 1987 and 2007, 97.5% of the Keenans’ income came from Canac
Kitchens as they worked almost exclusively for them. In 2007, the Keenans
also started working for Cartier, which was a competitor of Canac Kitchens,
when there was insu cient work. Nevertheless, most of the income that the
Keenans earned after 2007 (about 66%-80%) continued to come from Canac
Kitchens.
In 2009, Canac Kitchens terminated the relationship.
The Keenans sued Canac Kitchens and the main issue was whether the
Keenans were dependent, or independent, contractors.
Heather Hettiarachchi, LLB; MSc; CPHR
IntegritasWorkplaceLaw.com

4. Who is a Dependent Contractor?
Court’s decision
Based on the “exclusivity” of their service to Canac Kitchens in all but two
years and their economic dependency on Canac Kitchens, the court held
that the Keenans were dependent contractors and that the reasonable
notice period was 26 months.
The court rejected Canac Kitchens’ argument that the Keenans were not
dependent because they had worked for Cartier during the two years
immediately preceding the termination of the relationship.
The court stated that “Exclusivity cannot be determined on a “snapshot”
approach because it is integrally tied to the question of economic
dependency. Therefore, a determination of exclusivity must involve… a
consideration of the full history of the relationship.”
Heather Hettiarachchi, LLB; MSc; CPHR
IntegritasWorkplaceLaw.com

5. Who is a Dependent Contractor?
Employer Tips
To minimize liability in the event a contractor is found to be a dependent
contractor, employers should take the following steps:
Have clear, concise, written agreements.
If the contractor is hired for a xed term, the contract should clearly
state the start and end date. The contract should also clearly state the
notice to be given in the event the relationship is terminated before the
end date.
If the contractor is hired for an inde nite period, the agreement should
have an unambiguous termination clause which sets out the notice that
will be given.
The termination provisions of the contract should reflect, at a minimum,
the notice periods set out in applicable employment standards
legislation.
To the extent possible, try to ensure that the contractor does not work
exclusively or predominantly for your organization.
Heather Hettiarachchi, LLB; MSc; CPHR
IntegritasWorkplaceLaw.com

6. Who is a Dependent Contractor?
We advocate workplace integrity. Our goal is to provide
practical and effective advice to enable parties to
resolve their workplace issues in a timely and practical
way.
IntegritasWorkplaceLaw.com
iwl@telus.net
604.816.8577
Heather Hettiarachchi, LLB; MSc; CPHR
IntegritasWorkplaceLaw.com