Are you looking to hire independent contractors in your business? Then you might be wondering how do this effectively so that you find the right person the first time and protect your business along the way. In this article, you’ll learn the steps for how to hire independent contractors in Canada.
Step 1: Determine if an Independent Contractor is Right for Your Business
First of all, let’s define what an independent contractor is and what it isn’t. Essentially an independent contractor is someone who runs their own business or conducts freelance work in a business to do a specific task for a company. For example, if you’re a therapist in private practice, you might be hiring another therapist, usually through their own private practice or as a freelancer, to take on clients and conduct therapy with those clients.
It’s important to understand that when you’re looking to hire an independent contractor in Canada there are differences in day-to-day work expectations than there would be if you were to hire an employee. For example, you wouldn’t necessarily have control over their schedule or their work process, as long as the work gets done. Because independent contractors often work out of their own business, it’s likely that they have other work commitments along with the work for your business. However, it’s reasonable to want the work for your business to get completed in a timely manner. So, an important consideration when hiring independent contractors is to ensure that they have time and the availability to take on work for your business.
As a business owner, you might want to be cautious about how much control you have over the work process and schedule of your independent contractors because it could inadvertently lead into an employee relationship and cause financial headaches for you down the road. And that’s because the Canadian Revenue Agency (CRA) has specific guidelines regarding employee and independent contractor relationships. When paying independent contractors, you are not required to pay into the employment insurance (EI) or Canadian Pension Plan (CPP) as you would if you hired an employee. And if it’s determined that the business is acting as an employer to independent contractor instead of a business hiring another business to conduct work, according the CRA’s Employee or Self-Employed Guide, “An employer who fails to deduct the required CPP contributions or EI premiums has to pay both the employer’s share and the employee’s share of any contributions and premiums owing, plus penalties and interest” (CRA, n.d.).
In addition, independent contractors do not typically receive protection under employment or common law. However, if there is a dispute regarding employment or independent contractor status the courts may implement legal tests to determine if the employer had improperly designated independent contractor status and legal repercussions may occur, even if an independent contractor agreement was signed (Taylor Janis Workplace Law, 2023, May 7).
So, the first step when hiring in your business is to determine whether it’s an independent contractor or employee relationship that best fits your business. To learn more about the differences between employee and independent contractors, check out Episode 38 of the Designer Practice Podcast called Employee vs. Independent Contractor: Which is best for you and your practice.
Step 2: Identify the Key Tasks for the Independent Contractor
Next, you’ll want to identify and write out the key tasks that you’ll want completed by the independent contractor as these tasks will be highlighted through your postings, hiring contract and in some cases even during the onboarding process.
You might be thinking, “Well Kayla, I know what I want the independent contractor to do. Why would I want to take time writing it out?”
Because by knowing your key tasks, you’ll know exactly the knowledge, skills and experience of the person you’ll be looking for. You’ll gain clarity regarding the types of tasks that will be included in role so you can address it to the hiring contract. And it provides candidates a clear understanding of what their eventual duties will include. This helps ensure you hire the right person the first time.
Let me give you an example. Let’s say that you’re searching for a mental health therapist to join your team. If asked, most people would say that the task of a therapist is to conduct therapy – simple. And yes, that’s a correct answer but it’s not the whole answer. Specific tasks a therapist might be entrusted in while working as an independent contractor might include: conducting consultations and intake appointments, conducting therapy, writing case notes, participating in regular clinical supervision, managing their schedule and online bookings, in some cases they may be responsible for processing client payments or insurance payments, navigating the practice’s practice management software and so on.
You might even want to take it a step further and add important skills, knowledge or expectations you have to the task. So going back to our example, a therapist might be tasked with conducting therapy, writing case notes and managing their own schedule and online bookings. You might elaborate and say: conducting therapy using CBT principles; writing case notes in a timely manner (not exceeding one week from session date); and adding your appointment availabilities to our practice management software’s booking site at least 30 days in advance for clients to schedule appointments. So, as you can see their role is much more than just conducting therapy. And you’ll want to address that throughout the hiring process.
Step 3: Get your Hiring Contract Ready
This is probably the most important step, getting your hiring contract ready. We hiring in your business, you should always have your independent contractors sign a contract prior to starting work with you. Although you might think a verbal understanding is enough, it’s not because it can lead to misinterpretations and leave your business unprotected legally. A well-written agreement, drafted by a lawyer, can cover clauses that you might never even think about adding such arbitration clauses, non-solicitation clauses, and even termination of contract clause. These, along with other important clauses, can help protect you and your business should something happen between you and the independent contractor down the line.
Having a hiring contract drafted by a legal professional is paramount. But you might worry about the cost.
Fortunately, Corinne Boudreau, a Canadian Lawyer based in Nova Scotia and owner of Online Legal Essentials sells affordable legal templates that are instantly downloadable and customizable with all the (much needed) legal mumbo jumbo. When I first started my business, I had a lawyer draft my hiring agreement which cost 3x more than Corinne’s. And that’s because when you hire someone, you’re paying labour cost; whereas when you buy a pre-created template you pay for the product.
Corinne’s Legal Hiring Template pack includes employee, independent contractor and virtual assistant hiring contracts, non-disclosure agreements and question checklists so that you have everything you need to hire in to your business.
Step 4: Conduct a Search for Independent Contractors
Next, you’ll start your search for an independent contractor. Finding an independent contractor is a little different than searching for an employee. Although, you can certainly put an ad on Indeed but most job seekers on the platform are searching for employee jobs. Because independent contractors often work from their own business, the first place to search is on Google. For example, if you’re looking to hire a virtual assistant, you might search for virtual assistants on Google. Another option is to look for associations or organizations for the type of professional you’ll looking for. Again, if you’re wanting to hire a virtual assistant, a good place to look would be the Canadian Association of Virtual Assistants’ business directory.
However, this type of search might not always be fruitful, depending on the type of professional you looking for. For example, if you’re searching for a therapist, you might find more success with posting your vacancy with a therapist association than you would finding therapists who advertise their services as an independent contractor. You might wish to advertise on your website or social media accounts. But in either case, you’ll want to be clear that you’re looking to hire an independent contractor.
Step 5: Conduct Interviews
Regardless where you find potential candidates, you should always conduct interviews before you hire. Prior to conducting an interview, think of key questions you’ll ask potential candidates. Although it doesn’t have to be as formal as an employee interview, you might want to ask specific questions that pertain to the candidates’ skills and abilities, their desire for the work, and their time available to work in your business. Going back to our previous example, hiring a therapist, you might wish to ask questions about their time availability for working with incoming clients; the therapeutic approaches they use and work from; or the types of clients or populations that they are passionate about and driven to work with – this is important because it helps identify agency fit. So, take the time to prepare thoughtful questions so that you can find the right person on the first try.
Step 6: Give an Offer, Agree on Terms and Sign the Hiring Contract
Once you’ve decided on the successful candidate, give an offer. Unlike the employee relationship where the successful candidate is given an hourly rate, with the independent contractor relationship you may pay an hourly rate, a pay split, or package rate and the terms may be subject to negotiation prior to the agreement. As the independent contractor often owns their own business, they may request or provide a quote for their preferred payment type and amount which you can counteroffer. Although, the independent contractor has negotiation power, at the end of the day, it’s your business and you can accept or deny any proposal.
Once an offer is accepted, it is time to sign the hiring contract. As mentioned earlier in this article, having a hiring contract is essential to protect your business. If you’re looking for affordable legal hiring templates, Corinne Boudreau’s Legal Hiring Template Package is just the thing for you!
>>To check out the Legal Hiring Template Pack click here<<
Step 7: Conduct Onboarding Training
When you hire independent contractors in Canada you should include provide onboarding training. Your onboarding training might look a little different than if you were hiring an employee. For independent contractors, it’s not an expectation that you spend time training them on how to do the role but instead on agency-specific processes, procedures and expectations. Even though independent contractors have autonomy over how they do their business, they’re still working for your business and you’re still accountable for the work that they do. So, taking the time to train them on your processes, procedures and expectations can be helpful to ensure your business runs efficiently.
Conclusion
Knowing how to hire independent contractors in Canada can feel overwhelming but with these steps I hope you feel more confident with hiring. And if there’s one thing you take away today is to protect your business with a hiring contract. As I mentioned above, having a Canadian lawyer draft your contract can ensure that you’re covered. And there’s no easier way to do this than to purchase legal hiring templates. To purchase Online Legal Essentials’ Legal Hiring Template package, click here. And when you use the discount code EVASPARE10 at checkout you’ll receive an additional 10% off.
Disclaimer 1
Evaspare Inc. is an affiliate of Online Legal Essentials and may receive monetary compensation, at no extra cost to you, when you click on links and/or use promotional codes.
Disclaimer 2
Please be advised that this article is for educational and informational purposes only and is not intended to be professional advice.
References
Canadian Revenue Agency. (n.d.) Employee or self-employed? Retrieved from https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4110/rc4110-22e.pdf
Taylor Janis Workplace Law. (2023, May 7) Independent Contractor Law in Edmonton. Retrieved from https://www.tjworkplacelaw.com/edmonton/independent-contractor-law-in-edmonton/#:~:text=Employees%20in%20Alberta%20differ%20from,laws%20at%20no%20direct%20cost.