Is My Caregiver an Employee or Self-Employed?
We’ve had many people ask us whether the person that they’ve hired to care for their children or elderly parents should be considered to be an employee or if they’re self-employed. This distinction is important because it directly affects that person’s ability to collect employment insurance benefits under the Employment Insurance Act. There are potential implications with regards to how the worker is treated under the Canada Pension Plan.
When hiring a caregiver, a babysitter, or other domestic worker, you are considered to be an employer when the following three factors are true:
- You hire a person.
- You establish regular working hours. For example, from 9-5. This applies regardless of whether the hours are part-time or full-time.
- You are the one assigning and supervising the tasks to be performed and you’re the one calling the shots.
Keep in mind, the care is taking place in the home of the person being cared for. It is the family that will supply the caregiver with the tools that they need to complete the job such as toys, games, and any cleaning and cooking supplies. The employer will be in charge of telling the caregiver when they are required to be there and how to complete the tasks.
If you’re still not sure how to categorize your employee/new hire, you can request a CPP/EI ruling by completing the CPT1 form and sending it to your tax services office. You can find this form on the CRA website or you can contact us at www.nannytax.ca. We love to help and will provide you with domestic payroll solutions!
