When it comes to hiring a drone operator, there is no shortage of work-for-hire subcontractors in Canada. Given the level of skill, technology and regulatory compliance required to operate drones, hiring a commercial drone operator is often the most cost-effective method of incorporating drones into your business.
However, when hiring a drone operator, businesses should be careful to ensure that they are characterized as “independent contractors” – not as “employees”. The main reason that a business should not unwittingly allow a drone services operator to be considered an employee is because employers owe certain legal duties to their employees, and employees have specific legal rights that independent contractors do not.
This article will provide a brief overview of: (i) the distinction between independent contractors and employees; (ii) the legal and financial implications if a drone operator is considered an employee and (iii) practical tips for businesses when hiring a drone operator.
So, what is the difference? The essential distinction is that an independent contractor performs his or her work independently or “as a person in business on his own account.”
This distinction will be critical if the employment status of a drone operator is ever called into question. For example, if an accident or incident occurs in the course of operating a drone for your business, third parties may be more likely to sue you, in addition to the drone operator, if the drone operator is considered an “employee” of your business.
A drone services operator is more likely to be considered an independent contractor where:
- The level of control exercised by the business over the drone operator’s activities is minimal;
- The drone operator provides his or her own equipment and hires his or her own subordinates;
- The drone operator assumes a meaningful degree of financial risk;
- The drone operator assumes a meaningful degree of responsibility for management and investment in his or her business; and
- The drone operator has a meaningful opportunity to profit in the performance of his or her own tasks.
III. Legal and Financial Implications if Drone Operator considered Employee
There are significant legal and financial implications for a business if a drone operator is considered an employee rather than an independent contractor.
Independent contractors are not entitled to employment rights under the Ontario Employment Standards Act, 2000. However, if classified as an employee, a drone operator would be entitled to: minimum wage, overtime pay, public holiday pay, vacation pay, EI and CPP contributions, and potentially reasonable notice and severance pay in the event of a dismissal without cause.
A drone operator who is considered an employee may also be entitled to claim damages under the Ontario Human Rights Code and the Ontario Occupational Health and Safety Act, for human rights and health and safety violations, respectively, that occurred in the course of the drone operator’s employment. Additionally, if a drone operator causes an accident in the course of operating a drone for your business, your business may be held vicariously liable for the damages sustained by third parties.
IV. Practical Tips
Drone services agreements should be carefully drafted in order to make clear that the drone operator is an independent contractor. In order to reinforce this intention, businesses should ensure that the drone operator issues invoices for his or her services, registers for GST purposes, and files income taxes as an independent contractor.
Businesses should also ensure that the day to day reality of the employment relationship demonstrates that the drone services operator is an independent contractor. This may be achieved by ensuring that the degree of subordination between the business and the operator is minimal, allowing the operator to have significant autonomy over his or her work schedule and the manner in which work is performed, as well as allowing the operator to work for other businesses.
However, businesses should be careful not to misclassify drone operators that are actually employees as independent contractors. While this is unlikely to be a cause for concern when drone services companies are hired, this issue could arise if an “in-house” drone services operator is misclassified as an independent contractor. The Ministry of Labour can impose serious penalties on businesses that mischaracterize independent contractors as employees in or to avoid providing employee benefits. While Ontario has long prohibited the misclassification of employees as independent contractors, a recent amendment to the Ontario Employment Standards Act, 2000 (the “Act”) shifts the burden to employers to prove that an independent contractor is not an employee if a complaint is filed with the Ministry of Labour. Accordingly, there may be increased scrutiny on employers who attempt to misclassify employees as independent contractors.