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Don’t let CRA deem your independent contractors to be your employees

CRA goes after employers who misclassify workers.  As an employer, you can get in serious trouble with CRA for not paying worker benefits, or not making regular source deduction payments if you misclassify an employee as an independent contractor.  This is especially true if the worker gets hurt on the job or tries to collect EI after they leave your company.  You or your worker also do not have the right to determine if your relationship is that of an employer-employee or employer-contractor. CRA can deem what is proper contract employment and what is proper employee employment.

One of the best way to minimize contractor liability is to hire your contractors through a third party agency (commonly called contractor outsourcing or augmented staff outsourcing).  That’s why many large companies utilize recruitment agencies for contractor employment rather than hiring them on directly.  

However, not all third party recruitment agencies can provide the same level of legal protection.

As a federally registered Professional Employer Organization (PEO) and a provincially registered Employment Agency, our company Cronos Payroll Services Inc has the most sound legal structure to separate your company from the independent contractors.  As a professional employer organization, we take on the independent contractors of our clients and then lease them back to our clients anywhere in Canada.  We effectively mitigate your risk of employing the independent contractors and absorb the day to day payroll administration responsibilities. As a licensed employment agency regulated by CRA and various provincial Employment Standards Act, we can employ contractors (as incorporated contractors, sole proprietors and agency employees) and place them at client sites throughout Canada as our very own agency placement workers.  When your contractors work for us, we don’t force them to operate as incorporated contractors as some could be classified as personal service businesses (PSBs) by CRA. Instead, they can choose to be our agency employees or operate as self-employed sole proprietors where we would make all the proper source deductions on their behalf and pay all the statutory benefits where necessary, typically with an offsetting lower official wage to cover the difference.

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Why Employers need third party separation from their independent contractors

It’s not just CRA that you need to worry about! –  Your highly paid workers love to be independent contractors for personal tax reasons, until they get critically ill and need long term disability or try to claim unemployment insurance and find out they are not entitled to it. Suddenly their tune change fast and you find yourself at the end of a call with CRA or the Ministry of Labour that you have misclassified your worker as he/she should have been an employee all this time.  Suddenly your business is on the hook for interest and penalties on unpaid CPP, EI, and income tax deductions as well as employee benefits.  This can’t happen when your contractors are offloaded to a Professional Employer Organization like Cronos Payroll Services.

Our Services are AFFORDABLE

We have one of the lowest rates in the industry and in some circumstances, it can be completely covered by the savings obtained through our lower WCB/WSIB employment agency rates for professionals, engineers, and managers.

Detailed Services

Contractor Payroll Administration – Operating as a registered Professional Employer Organization (PEO), we take on the contract/augmented staff of our clients and lease them back as agency placement workers. We effectively mitigate the employer risk and look after all payroll obligations.

Contractors Who Can’t Get WCB/WSIB Coverage – Some independent contractors cannot obtain their own WCB/WSIB coverage because the respective provincial boards deem them as employees (especially notable in BC, Saskatchewan, and Ontario). For such contractors, we can payroll them through our agency as placement workers such that they can get coverage under our agency’s WCB/WSIB policy which usually have significantly better rates.

Overcoming High WCB/WSIB PremiumsDepending on the industry, WCB/WSIB can classify independent contractors into very high premium categories not because of the type of work they do, but because of the industry they belong to. As employment agencies is considered its own industry, that same contractor could qualify for significantly lower WSIB premiums if placed through us.  Compared to industries like construction, our agency industry rates for engineers, managers, and technical professionals can be 10X lower.

U.S. Contractors – We can payroll US contractors working in Canada including paying them in US dollars directly into their US domiciled bank accounts (via ACH electronic transfer). We have even brought US independent contractors into Canada under the NAFTA professional work permit with our agency as their registered Employer of Record with CIC (Citizenship & Immigration Canada).

Returning Retirees – Some of our clients want specific retired employees to return back to work full-time, part-time, or on a project by project basis, but their internal corporate policies makes it difficult to employ them. We have experience payrolling returning retirees as contractors for governments and crown corporations that have specific compliance requirements for retirees receiving a pension.

Legal Compliance

Bona Fide Legal Structure – Cronos   Payroll Services Inc   is   a federally registered Professional  Employer Organization  (PEO). As a registered PEO, our clients would off-load their independent contractors to us where we effectively become their employer. We shoulder the employer risks and handle the day to day payroll obligations of these contractors by leasing them back to our clients as agency placement workers. By using us as their PEO partner, our clients get assurance and legal protection that the independent contractors now placed through our agency are in compliance with all employment laws as agency placement workers. 

We are a Licensed Employment Agency – This is extremely important as this status allows us to assure all stakeholders (the independent contractors, ourselves as the employment agency, and the client) are in compliance with employment laws. CRA, various provincial Employment Standards Act, and WCB/WSIB all have specific regulations on how employment agencies can employ placement workers as contractors and not employees. Legal compliance with these employment agency regulations is therefore essential. For this very reason, we are a provincially licensed employment agency such that we can deliberately operate within the contractor employment laws and regulations specific to employment agencies.

Legal Framework – We hired Moody Gartner Tax Law LLP (Calgary, AB), one of the preeminent law firms in Canada specializing in independent contractor law, to develop the legal framework with our placement workers and our clients. We want to assure all parties are in compliance with CRA regulations, various provincial employment law regulations, worker’s compensation board regulations, and specific provincial acts such as the Ontario Employer Health Tax (EHT). Although our clients typically have their own legal agreements for us to use, they have found our input to be incredibly valuable due to the strong legal insights we have of the Professional Employer Organization (PEO) industry. For example, one of our clients consulted us to normalized their sole proprietor hourly rates with their incorporated contractor hourly rates to assure their budget remains the same when hiring either type of contractors.

Source Deduction Compliance – We do not force our placement workers to work as incorporated contractors where they are responsible for their own source deductions. Instead, we make all WCB/WSIB, and source deduction payments on behalf of placement workers who choose to be agency employees or sole proprietors as required by WCB/WSIB and CRA. However, the in-pocket rate of these types of workers are reduced by these mandatory remittance requirements. We also educate and pre-qualify our placement workers who choose to be incorporated contractors to assure they do not run afoul of CRA’s Personal Services Business (PSB) designation.  If they do, we force them to operate as either sole proprietors or agency employees where we make the mandatory source deductions on their behalf.

Excellent Customer Service

We recognize that providing contractor payroll service is a commodity based business where we need to have exemplary customer service to differentiate ourselves from the competitors. For this reason, we have live agents with no wait times to answer all client and contractors calls during regular business hours and our average contractor on-boarding time is less than one week. We are even capable of on-boarding a contractor the very next day.

See what our happy contractors have to say:

I have been associated with Cronos for 7 months. Their support on the initial phases made everything go smoothly. Their customer service is second to none. They are quick to respond to my concerns and very courteous. My payment statements were processed quickly and payment was deposited in my account in a timely manner.    My dealings with Cronos, they have been very professional. Their customer service deserves a 5 out of 5 star rating.   Thank you Cronos it has been a real pleasure dealing with you.

Mike Kobayashi5Stars

Contractor placed at

Bruce Power

I have been working thru Cronos for the past 22 months on a large industrial construction project in Saskatchewan. I have found their customer service and timing of payments to be first class. Any questions that due arise either from myself or Cronos are answered and or explained in a very professional manner.  5 out of 5 stars from this satisfied customer.

Llyle Gladu5Stars

Contractor placed at

Amec Foster Wheeler

5 Stars

Cronos is punctual, professional, and their customer service is second to none. 

Travis Pankiw5Stars

Contractor placed at

Amec Foster Wheeler

I truly thank you both for the professionalism and prompt payment/response to questions. I hope we have a chance to work together in the future.

Steve Watkins5Stars

U.S. Contractor placed at Amec Foster Wheeler

Cronos has been my payroll provider for the past 6 months and I have found their services to be very responsive and accurate.  My contacts at Cronos keep in touch frequently and provide quick response to my needs.  I appreciate the consistency and level of service I receive from the Cronos Team.

Amy Salisbury5Stars

Contractor placed at

Bruce Power

I just want to give you a status update on working with Cronos here at Bruce Power for the past 4 months. So far the work here has been exceptional. I think that you and your staff at Cronos have definitely set me up for success. I have had no issues getting on-boarded and getting setup through tempus. All my invoices have been paid on time and the responses to all my questions have been prompt. I am very pleased.

Mohamad El-Makdah5Stars

Contractor placed at

Bruce Power