I’m just continuing my discussion of court cases dealing with the issue of whether a dental professional is an independent contractor or an employee:
509023 Alberta Ltd. v. Canada: 2004 Tax Court of Canada Decision
In 509023 Alberta Ltd. v. Canada, [2004] T.C.J. No. 628, the Tax Court of Canada had to determine whether a company that offered hygiene services had failed to deduct and remit Employment Insurance premiums and Canada Pension Plan contributions on behalf of its hygienists (whose services the company offered). The Canada Revenue Agency argued that the company hired the hygienists as employees and was therefore obligated to do so; the company disagreed, arguing that they were independent contractors.
The Tax Court of Canada found that a dental hygienist was, pursuant to the Dental Disciplines Act of Alberta Part 1, Section, someone who “may, under the supervision of a dentist, engage in the practice of dental hygiene…”. The Court then examined a number of factors in deciding how the company had engaged the hygienists:
- The hygienists had the freedom to choose whether to be employees or independent contractors (the numbered company offered the hygienists the option).
- Hygienists did not have a great risk of loss or chance of profit other than as employees increasing their hours, but could attract other patients to the office.
- The hygienists were professionals and were treated differently than the regular workers.
- The hygienists wear a uniform, which they paid for; the idea that they should have a uniform came from the hygienists.
- Two of the hygienists decided to incorporate.
- All tools, equipment supplies, etc. required for the hygienists were provided by the company.
- The supervision by the dentist was lax: the dentist told the hygienist what to do but not how to do it.
Ultimately, the Court found that, while it could have gone either way, it decided in favour of the company. The Court examined things like whose business it is in the eyes of the employee, profit and loss, and whose tools and capital are being used. The Court found that it could go either way (employee vs. independent contractor). The Court concluded that the numbered company offered both and, given the absence of a sham and the presence of good reasons, it was enough for the Court to conclude that there was an independent contractor relationship. Close call!
3868478 Canada Inc. v. Canada: 2006 Tax Court of Canada Decision
In 3868478 Canada Inc. v. Canada, [2006] T.C.J. No. 334, the Tax Court of Canada in Toronto had to deal with the issue of whether five dental hygienists were employed by the corporation as employees or independent contractors. If they were employees, the corporation would owe CPP contributions and EI premiums. The corporation was owned and controlled by a dentist to provide dental health services to the dentist’s practice.
The Tax Court of Canada reviewed the previous decisions involving dental hygienists and concluded that all five dental hygienists were employees. Bowman CJTC came to that conclusion on the basis that the dentist told the dental hygienists what patients to work on (and his office scheduled the appointments), exercised a sufficient degree of control over the dental hygienists, and provided all of the necessary tools. For their part, the dental hygienists were paid an hourly rate and had no financial commitment or investment that was at risk and were sufficiently integrated into the dentist’s practice. All of these factors pointed to the dental hygienists being employees and not independent contractors.
Importantly, the Court summarized what was important in determining whether a person is an employee or an independent contractor. If a person is engaged to perform services personally rather than in business on their own account, then they are more likely to be an employee. Factors that help make that determination include the level of control the payor has over the worker’s activities; whether the worker provides their own equipment; whether the worker hires their own helpers; the degree of financial risk taken by the worker; the degree of responsibility for investment and management held by the worker; and the worker’s opportunity to profit in the performance of their tasks.
Salman v. Canada: 2008 Tax Court of Canada Decision
In Salman v. Canada (Minister of National Revenue – MNR), [2008] TCJ. No. 573, the Tax Court of Canada in Toronto had to deal with the issue of whether a dental hygienist worked for a dentist as an employee or independent contractor over a 3 year period. The government argued that the dental hygienist was an employee and, as such, the dentist owed CPP contributions and EI premiums. The dentist argued that the dental hygienist was an independent contractor and therefore owed no such contributions or premiums.
The Court held that the dental hygienist was an employee. The Court came to that conclusion on the basis that the dental hygienist: was not independent as to her time; was subject to the dentist’s direction and control while working in the office; did not provide her own equipment but used the dentist’s (e.g. tools, scales, an office, a chair, floss, gloves, masks, and even the little gifts given after the procedure, such as toothbrushes); had no opportunity for profit as she was paid by the hour (instead of commission); had no risk of loss (because she had minimal expenses for membership dues and insurance), and could not sub-contract and had to provide the services individually.
Importantly, the Court held that it wasn’t necessary to examine the intention of the parties (e.g. through their agreement) because all factors already pointed to the dental hygienist being an employee and not an independent contractor. The bottom line is that the characterization of the relationship between the dentist and hygienist is a matter of law, not of agreement, because it affects third parties (e.g. the government).
