Independent Contractor Management In Canada...Just Like The U.S.?
A question that comes up often is whether or not there's really a need to be concerned with your corporate HR department's response to the management of independent contractors, afterall, unlike the US, there haven't been any really big contractor misclassification cases in Canada...yet. In fact, with a few exceptions like UPS, Microsoft, Fedex and a handful of other big cases, even companies in the US might think there's really not that much reason for concern. Think again! With all levels of government in both the U.S. and Canada looking for ways to both improve government tax revenues and protect workers, the issues that surround independent contractor misclassification are bound to come under increasing scrutiny. So, don't be surprised and unprepared when the tax department comes knocking!
In Canada there's a history of aligning some of our policies with our American neighbours to the South, and as it applies to the independent contractor workforce, we think there is a strong likelihood of policy alignment. Most recently it was announced that Canada would be aligning its GHG Emissions Regulations for heavyduty vehicles with that of the United States as just one example of how Canada aligns its policies. With the estimated millions or perhaps billions of dollars in lost government revenue in this area at stake, and the current Canadian federal government's desire to not only eliminate deficit spending but return to the surplus budgets of former federal administrations, heightened scrutiny of the independent contractor workforce, like that taking place in the states currently can't be far off.
Why is it that there hasn't been a flood of cases for misclassification in the states? A very good question. There has been some speculation on this but in our view it's likely that we continue to operate in an 'early days' environment. There is a great deal of learning to be done, particularly on the government side, and their work underway currently is providing both process and precedent so that when they are well prepared they can begin carrying out their investigations in the sphere of the larger corporations. They're cutting their teeth so to speak in preparation for a 'full meal deal'. In Canada, who knows, provincial and federal tax authorities may even be learning process and precedent from the U.S. experience.
Independent contractors are contributing vital services to business today, and in ever increasing numbers. However, there are some risks in this practice and it's vital to the health of your company that you address this issue with effective independent contractor management structures. Don't delay. Talk with your HR department now and determine if you are prepared and protected from the potential fines and penalties associated with independent contractor management.
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