Every month, Kate Teves, HR consultant, recruiter and founder of The HR Pro, answers Realtors’ questions about anything and everything related to human resources. Have a question for Kate? Send us an email, or leave a comment below! 

Question: Dear Kate, As a busy agent, I find it incredibly helpful to have an administrative assistant, but I don’t want to deal with payroll, can they be an independent contractor instead?

Kate: That is an excellent question and the short answer is—it depends. Let’s review scenarios where a contractor relationship will make the most sense and others where the individual will not meet the requirements of a contractor and can be erroneously misclassified which can lead to costly consequences.  To answer this question, we will compare a contractor admin assistant and an employee admin assistant. 

The legal reality: CRA guidelines

Let’s consider the legal guidelines and why they matter. The CRA uses several criteria to determine whether someone is an employee or an independent contractor.

These include:

Control: Does the employer dictate how, when, and where the work is done?

Considerations:  Does the individual have a set schedule?  Do they work from your office?  

If your assistant is working on a set schedule, let’s say 9-5 when you can easily get a hold of them and expect immediate assistance and if they consistently work from your place of business, even if in a hybrid capacity, they will be classified as an employee.

Tools and equipment: Does the worker use the employer’s tools or their own?

Considerations: Did you provide them with a laptop or a computer at the office?

If you provided them with a laptop or a stationary computer, software, or programs (think Canva, Illustrator, etc) then you have an employee.   If they work exclusively on their own equipment and programs, in this case, are working with a contractor. 

Opportunity for profit: Can the worker independently pursue profit, or are they limited to their earnings from the employer?

Considerations:  Are they working exclusively for you?  

Employers can ask for complete exclusivity as well as a notification if the employee has obtained a part-time role elsewhere or is providing contracted services to another business.  Furthermore, an employer reserves the right to decide that the secondary income source is a competitor and limits the employee to only working with businesses outside of scope.

Contractors on the other hand are presumed and permitted to work with similar and often competing businesses without any complications, providing that they are abiding with the NDAs in place.

There are additional criteria to consider while assessing the relationship with your assistant and they are outlined below.

What happens if you misclassify?

Misclassifying an employee as a contractor might seem appealing—it simplifies payroll, avoids mandatory deductions like EI and CPP and eliminates the need for benefits. However, the consequences of getting it wrong can be severe:

Back taxes and penalties: If the CRA audits your business and determines misclassification, you may owe back taxes, CPP, EI contributions and penalties.

Legal liability: Misclassified employees can sue for unpaid wages, overtime, vacation pay, and even wrongful termination.

Reputational damage: Facing a CRA audit or lawsuit can tarnish your professional reputation.

Fines and interest: Beyond back payments, the CRA may impose fines and interest charges on outstanding amounts.

Case study: When misclassification costs big

The real estate agent who thought it wouldn’t matter

In one case, a Realtor in Toronto hired a full-time assistant and labelled them as an independent contractor. The assistant worked exclusively for the agent, used the agent’s office space and adhered to a fixed schedule. After their contract ended, the assistant filed a complaint, claiming they were an employee.

The CRA audited the agent and determined that the assistant was indeed an employee. The agent was required to pay:

• $15,000 in back CPP and EI contributions
• $8,000 in penalties and interest
• Legal fees exceeding $10,000 to resolve the complaint

What began as a cost-saving strategy ended up costing over $30,000—not to mention the time and stress involved.

Are you actually saving money by not putting your assistant on payroll? 

Let’s also consider a different scenario, one where the CRA does not audit your business. Are you actually saving money by not putting your assistant on payroll?  I am afraid the answer here is “no”.

Many of the reasons an agent would lean towards a contractor are because of the management of items such as CPP (Canadian Pension Plan), EI (employment insurance), WSIB (workers safety insurance board), and vacation pay. In most cases, this is done automatically by your bookkeeper especially if the employee’s hours do not fluctuate. So let’s do the calculations.

• Employee salary (full-time): $60,000
• Canada Pension Plan (CPP): $3,450.00
• Employment Insurance (EI): $840.00
• Workplace Safety and Insurance Board (WSIB): $822.00 (based on a 1.37 per cent industry average rate)
• Vacation pay: 4 per cent = $2400

Total spend: $67,512

• Contactor: $60,000
• HST (13 per cent): $7,800

Total spend: $67,800

As you can see the difference is actually negligible but the headaches you will avoid by doing it right the first time will be significant.

Misclassifying your assistant as a contractor may seem like a quick solution to avoid payroll complexities, but the risks far outweigh the convenience. The CRA’s employee classification guidelines are clear, and the consequences for non-compliance can be steep.

Hiring and compensating your administrative assistant properly is not just a legal obligation—it’s an investment in the sustainability and integrity of your real estate business.