As of January 1, 2023, certain business and information technology (“IT”) consultants in Ontario are exempt from the application of the Employment Standards Act, 2000 (the “ESA”), provided certain prescribed conditions are met.
“Business consultants” and “information technology consultants” are defined as individuals who provide advice or services to a business or organization regarding its performance, or its information technology systems, respectively. An individual who meets the definition of “business consultant” or “information technology consultant” is not subject to the requirements of the ESA, if all of the following conditions are met:
- The consultant provides services through a corporation or a sole proprietorship. The consultant must be providing services through either: (a) a corporation of which they are a director or a shareholder party to a unanimous shareholder agreement; or (b) a sole proprietorship if the services are provided under the business name of a sole proprietorship that is registered under the Business Names Act.
- There is a written agreement addressing the terms of the consultant’s services, which must include when and how much the consultant will be paid. The consultant’s rate of pay must be at least $60 per hour and cannot include bonuses, commissions, expenses, travelling allowances or benefits.
- The consultant is paid in accordance with the terms specified in the written agreement.
- Other requirements that may be established by regulation are met.
The prescribed conditions reflect that the exemption for business and IT consultants is fairly narrow and appears to be meant to capture those consultants who are in business for themselves. Accordingly, in determining whether or not the exemption applies, organizations will need to ensure that any business and IT consultants meet the definition and prescribed conditions set out in the ESA, as well as any regulations that may be established.
It is unknown whether or not Ontario courts will consider the exemption under the ESA in the assessment of any common law tests with respect to independent or dependent contractors.
As this amendment has only recently come into effect, we will continue to monitor for caselaw interpreting the new exemption for business and IT consultants and provide updates as they become available.