Employee or Contractor? Know the Difference

✍️ By Debbie Balfour | WBN News | June 18, 2025 | Click HERE for your FREE Subscription to WBN News and/or to be a Contributor.

If you’re calling someone a contractor but treating them like an employee, you’re walking into legal quicksand.

It may seem like a smart way to lower payroll costs, but in Canada, misclassifying workers can trigger severe penalties from the CRA and provincial employment standards authorities. It’s a costly mistake that can cripple your business.

Here’s the key difference:

Employees follow your rules, schedule, and use your tools.
Independent contractors control how, when, and where they work—and they invoice for services.

If you’re avoiding taxes or benefits by labeling someone a contractor, you could face:

Back pay and vacation entitlements
CRA penalties and tax arrears
EI and CPP contribution shortfalls
Wrongful dismissal and human rights claims

Even if your contractor is “fine with it now,” everything changes in an audit or after a sour business split.

Watch this quick video from the Employment Law Show for a real-world explanation of how misclassification gets businesses into hot water:
📺 Watch now on YouTube

How to protect yourself:

Use written agreements
Don’t dictate how tasks are done
Get legal advice before hiring/firing
Maintain proof of independent business activity

Affordable legal memberships can help with contract reviews, CRA classification issues, and more, without hefty hourly fees.

Don’t let this one mistake bankrupt your business. It’s not worth the gamble.

Have questions or not sure where to start? I’m here to help—reach out anytime.

Debbie Balfour | Real Estate Investing Success Coach + Podcast Host
📍 Website: www.DebbieBalfour.com
📧 Email: Debbie@DebbieBalfour.com
🔗 LinkedIn: Debbie Balfour
▶️ YouTube Channel: youtube.com/@DebbieBalfour

TAGS: #Contractor Or Employee #Canadian Employment Law #Avoid CRA Penalties #Small Business Hiring #Legal Classification #Entrepreneur Legal Tips #WBN TV #WBN News Langley #WBN News Abbotsford #WBN News Okanagan #Debbie Balfour