Toronto Employee vs Contractor Checklist - Bylaw

Labor and Employment Ontario 3 Minutes Read · published February 11, 2026 Flag of Ontario

In Toronto, Ontario, properly classifying a worker as an employee or an independent contractor affects payroll obligations, municipal contracting rules and employment standards. This checklist explains the main legal tests used by Canadian and provincial authorities, how the City of Toronto approaches contractors, where enforcement is handled, and practical steps employers and workers should follow to reduce risk and respond to complaints.

Key legal tests and considerations

Determination depends on multiple factors rather than a single label. Decision-makers consider control over work, ownership of tools, chance of profit and risk of loss, integration into the business, and contractual terms. For income tax and payroll purposes the Canada Revenue Agency explains the combined-factor approach used to decide employee versus self-employed status [1].

Look at the substance of the working relationship, not just the written contract.

Practical checklist for Toronto employers and workers

  • Review who directs when, where and how tasks are done; document supervision and scheduling.
  • Record who supplies tools and materials and who bears business risk.
  • Keep written contracts that reflect actual working arrangements and update them when duties change.
  • Audit payroll and remittances annually to ensure CPP, EI and income tax were handled correctly.
  • When contracting with the City, follow Toronto procurement rules and verify any city-specific contracting terms [2].

Penalties & Enforcement

Enforcement depends on the issue and the enforcing authority. Tax and payroll remittance errors are addressed by the Canada Revenue Agency; employment standards complaints go to the Ontario ministry; municipal contracting breaches are handled by City of Toronto procurement or contract compliance. The cited CRA and Ontario pages explain assessment and compliance processes but do not list fixed fine amounts on the same page, so specific monetary penalties are not specified on the cited pages [1][3].

If you suspect misclassification, act quickly to gather contracts, pay records and communications.
  • Monetary penalties: not specified on the cited CRA and Ontario pages; reassessments, interest and penalties may apply depending on the authority involved [1][3].
  • Escalation: first complaints may lead to review and reassessment; repeated non-compliance can lead to administrative penalties or contract remedies, where applicable.
  • Non-monetary sanctions: orders to pay unpaid wages, direction to remit deductions, contract termination, debarment from city procurement, and court action.
  • Enforcers and complaint pathways: CRA for tax and payroll issues; Ontario Ministry of Labour for employment standards; City of Toronto procurement or by-law enforcement for municipal contracting concerns [1][2][3].
  • Appeals and reviews: CRA reassessments have objection and appeal processes; provincial orders under the Employment Standards Act have review and appeal rights — time limits vary and are not fully detailed on the cited Ontario page, so consult the ministry pages for exact time limits [1][3].

Applications & Forms

The CRA provides forms and guidance for payroll accounts and remittances; specific municipal forms for contractor declarations may appear in City procurement documents. Where a named City form or a provincial form is required, it is published on the issuing agency's website; if no form is required, none is officially published on the cited procurement or employment standards pages [2][3].

Action steps

  • Audit current workers and contracts within 30 days; correct payroll remittances where needed.
  • When bidding on or performing City contracts, disclose contractor status and follow the City of Toronto contracting rules [2].
  • If you receive a complaint, gather records and contact the appropriate enforcement office listed below.
Documents and contemporaneous records are the strongest evidence in a classification review.

FAQ

How do I know if a worker is an employee or a contractor?
Look at control, ownership of tools, chance of profit, risk of loss and integration; consider CRA and provincial guidance and the actual working relationship, not just the label. [1]
Who enforces misclassification in Toronto?
CRA enforces tax and payroll remittance issues; the Ontario ministry enforces employment standards; City of Toronto procurement enforces municipal contracting rules. [1][2][3]
Can the City terminate a contract for misclassification?
Yes; municipal contract terms may allow termination or other remedies for non-compliance with procurement rules. Check the specific contract and procurement documents. [2]

How-To

  1. Gather contracts, invoices, pay records and communications that show how work was assigned and supervised.
  2. Compare facts to the CRA factors and Ontario guidance to form a preliminary classification [1][3].
  3. For municipal contracts, review procurement terms and disclose contractor arrangements to City contracting officers [2].
  4. If in doubt or if a complaint arises, contact CRA for payroll issues or the Ontario ministry for employment standards and follow their guidance to rectify problems.

Key Takeaways

  • Evaluate classification using multiple objective factors, not contract labels.
  • Keep clear, contemporaneous records to defend your classification.

Help and Support / Resources

  1. [1] Canada Revenue Agency - Employee or self-employed?
  2. [2] City of Toronto - Doing business with the City
  3. [3] Ontario Ministry of Labour - Employment Standards

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