'Employers and employees think if they agree with each other that they’ll be called contractors, then that's what the law is going to deem them as'
Misclassifying workers has always been a legal risk for businesses, but with Ontario’s new Digital Platform Workers’ Rights Act (DPWRA), that risk has escalated. Companies that have long relied on independent contractor models, particularly in the gig economy, may find themselves exposed if those contractors are being treated like employees.
And as Christopher Achkar, founder and managing partner of Achkar Law, points out, the problem is both widespread and misunderstood.
“It is a problem that exists quite a bit,” he says. “And employers and employees seem to think that if they agree with each other that they're going to be called contractors, then that's what the law is going to deem them as. And that's just simply not true.”
Protections for digital platform workers
The DPWRA, introduced to better protect digital platform workers, mandates a suite of rights for workers including minimum wage during “engaged time,” increased transparency in work assignment logic and written explanations for suspensions or terminations, among others. It also gives workers the right to resolve disputes in Ontario courts, a significant shift from previous requirements to go through international arbitration.
These rights apply primarily to independent contractors, who had previously lacked such protections. Employees are already covered under the Employment Standards Act (ESA), which remains stricter than the DPWRA in many respects, Achkar says.
But the overlap between the two regimes creates new pressure points, especially for employers that may be misclassifying workers knowingly or otherwise, he says.
When the relationship ends, that’s often when legal problems begin. Workers who were treated as employees, but paid and labeled as contractors, can file claims for termination pay or other entitlements under the ESA, and courts tend to side with the worker, Achkar says.
“HR leads, companies and lawyers advising these employers should absolutely be careful when it comes to outlining the obligations of these employers... because there is overlap between the Employment Standards Act and how it applies to employees, and same with how it would apply to workers of the gig economy.”
This overlap has legal consequences. An employer that mistakenly relies on the DPWRA to govern a worker who should have been classified under the ESA may find themselves subject to more severe penalties. The Ministry of Labour has stated it will be enforcing the DPWRA’s provisions, but how aggressively remains to be seen.
Why gig platforms must rethink HR and compliance
The introduction of the DPWRA doesn’t just create new rights — it demands operational change. Companies now face obligations that include providing written explanations before job acceptance, outlining pay structures, work assignment logic and how performance ratings affect future earnings.
These requirements go beyond what many platforms currently offer, adding a level of transparency that hasn’t historically been part of gig work.
“It's revamping the onboarding system, payment system and compliance to meet essentially, sort of halfway or more similar to the Employment Standards Act,” Achkar says.
This revamp also means digital platforms need to establish dual systems to govern their workforce. One for those covered under the ESA, and another for workers who fall under the DPWRA. It’s not just a matter of changing contracts; it’s about altering internal processes, employee training and human resources infrastructure.
“Every company is going to have two systems now,” Achkar explains. “One for employees and Employment Standards Act, and one for the independent contractors. In which category do we want these workers? That’s going to be a decision for the HR personnel and companies.”
Ultimately, compliance isn’t just about avoiding penalties. It’s about making an informed and legally sound decision at the outset of the employment relationship. That decision (employee or contractor) can’t be made on convenience or consensus alone.
“This is a question that has been thought about by all the other employers, not just the digital platform employers,” Achkar says. “The digital platform employers or operators now would simply have to engage in compliance strategy and analyzing their workers in terms of the degree of control that they have over these workers, and if they're truly independent contractors or not.”
