She signed contractor deals for years, but the Tax Court saw something different
Both the worker and her employer wanted her to be an independent contractor. The Tax Court just ruled that wanting something doesn't make it legally true.
In a decision released September 8, 2026, Justice Lara Friedlander of the Tax Court of Canada ruled that a media and design professional was in an employment relationship, not an independent contractor arrangement, despite years of signed agreements describing her as a contractor. The court allowed her appeal without costs and ordered the Canada Revenue Agency to reassess her insurance and pension contributions for the period from January 2023 to October 2024.
From full-time hire to contract worker
The worker joined a small business-matching startup in January 2019 as an employee, producing videos and other media content for the company's website. Her diploma was in photojournalism, and she had freelanced before taking the job.
By mid-2019, her role had grown well beyond video production, and she asked the company's chief executive if she could switch to independent contractor status. She testified that she wanted the flexibility to keep teaching yoga and take on other freelance work on the side, and the company agreed.
A new agreement in June 2019 renamed her role, raised her hourly rate, and used the language of contract work throughout. More letters followed over the next several years, each describing short-term projects and, at times, dangling the possibility of bonuses, stock options or a share of future revenue that never came through.
Contracts on paper, a different reality on the job
The worker testified that after she signed the new contract, “nothing really changed” and she was not treated any differently than before. Those agreements said little about who controlled her schedule, who owned her equipment, or whether she could hand off work to someone else.
In practice, she kept using her own laptop and phone, but she relied more and more on software the company owned as her responsibilities expanded. She was given a company email address and required to store all of her work, including emails, on the company's shared drive. She also needed the CEO's permission to take on an extra yoga class or to go on vacation.
The company's chief executive assigned most of her tasks based on immediate business needs, met with her several times a week to check on progress, and held monthly reviews that resembled performance evaluations. She was not permitted to subcontract her duties or do outside work directly for the company's clients.
Factors that shaped the court's decision
Courts have long said that what really counts isn't the label on a contract, but what actually happens day to day. Using a well-established legal test, the judge looked at who controlled the work, who owned the tools, whether there was any real chance to profit or lose money, and how central the worker's job was to the business.
The judge found that the company, not the worker, controlled when and how the work got done, and that she had little real chance to profit or come out behind financially. On top of that, she could not hand her duties off to anyone else, and her role had stayed central to the business for more than five years, with no sign she ran a similar operation for other clients before or after.
Weighing all of that against years of paperwork calling her a contractor, the judge decided that what actually happened on the job mattered more, and ruled the relationship was one of employment. The worker, who left the company in October 2024, said that despite the contractor agreements, “I didn’t feel like my time was my own.”
