Is Your Independent Contractor Really an Independent Contractor at Your Canadian Clinic?
Hiring independent contractors can feel like the easiest way to run a physiotherapy clinic. No payroll, less overhead, more flexibility. It seems simple. But here’s the truth: the CRA doesn’t care what you call someone. They care about the actual relationship. If your “independent contractor” looks, acts, and works like an employee, you could be on the hook for audits, back taxes, penalties, and a whole lot of stress.
I want to be clear before we dive in: I am not a lawyer or an accountant. I’m sharing this through the lens of a clinic owner and consultant who has lived these challenges and helped other owners navigate them. If you need certainty, talk to an employment lawyer or an accountant. But if you want to understand what the CRA is looking at, and how to make smart choices for your business, this breakdown will help.
The CRA says they look at the entire working relationship when deciding if someone is an employee or self-employed. No single factor makes the decision. Instead, they consider control, financial risk, ownership of tools, and integration into the business. To make this practical, here are six key questions every clinic owner should ask about their independent contractors.
1. Who Sets the Fees and Handles Billing?
A proper independent contractor sets their own rates and invoices for their services. They may use their own merchant system or send you an invoice at the end of the month. That shows independence.
Employee territory looks like this: the clinic sets all the fees, handles all the billing, and pays the practitioner in a way that looks like payroll. The contractor has no say in pricing.
If you want to keep this more IC-aligned, put it in writing that the contractor sets their own rates. Even if you process payments on their behalf, make sure the contract and your processes reflect that they have authority over their pricing.
2. Who Controls the Schedule and Time Off?
Independent contractors should control their calendar. They decide when and how much they work, and when they take vacation. Maybe they block off two weeks in July, or they decide they only want to work evenings. That’s their call.
Employee territory looks like this: the clinic sets the schedule, and the practitioner has to “ask permission” to take time off. If they need approval for a vacation request, that’s employment language.
To keep it IC, frame your requests for availability as collaboration, not mandates. Make it clear in the contract that scheduling decisions rest with the contractor.
3. Who Provides the Equipment and Supplies?
Independent contractors usually bring their own tools. That could mean treatment tables, supplies, or software. They also pay for their own continuing education, insurance, and business expenses. That’s what makes them a separate business.
Employee territory is when the clinic provides absolutely everything: the space, the table, the supplies, the equipment, and even pays for courses. That level of dependency looks like employment.
To keep it IC, set clear expectations that contractors provide their own core tools and pay for their own professional expenses. The more they invest in their business, the stronger their IC status looks.
4. Who Bears the Financial Risk?
Independent contractors carry some of the financial risk. They might pay rent for the space, cover their own marketing, or absorb losses from no-shows and cancellations. They take on the possibility of both profit and loss.
Employee territory looks like this: the clinic guarantees income no matter what. If a patient cancels, the practitioner still gets paid. All the risk sits with the clinic.
To make it IC, use rental agreements or percentage splits that reflect shared risk. Put clear no-show policies in place that show the practitioner is accountable for some of that risk.
5. Can They Work Elsewhere?
Independent contractors should be free to work at other clinics, run their own business, or see clients elsewhere. That’s part of what defines their independence.
Employee territory looks like this: contracts restrict outside work, include non-compete clauses, or impose penalties if the practitioner wants to see patients somewhere else. That screams employment.
If you want a true IC model, remove exclusivity clauses. Contractors should be able to work for multiple clinics, and your agreement should acknowledge that.
6. How Integrated Are They Into Your Clinic?
Independent contractors are supposed to be their own business. They might have their own branding, their own website, and their own business cards. Patients may know they are self-employed and simply practicing out of your clinic space.
Employee territory looks like this: the practitioner is completely integrated into your branding. Patients see them as your staff. They’re included in every team meeting, on the clinic website as if they’re an employee, and they only use your clinic’s branding.
To keep it IC, make independence visible. Use language in marketing and patient communication that acknowledges they are self-employed and operating their own business within your clinic.
What Clinic Owners Can Do
At the end of the day, the CRA doesn’t care what your contracts say if the day-to-day relationship looks like employment. That’s why it’s so important to step back and ask yourself:
Why am I choosing ICs or employees?
Does this model actually fit my clinic’s values and systems, or am I defaulting to ICs because it feels easier?
Am I being honest about the financial and compliance risks each model brings?
Review your contracts regularly with legal help. Be intentional. Document independence if you use ICs. And don’t be afraid to choose an employment model if it actually protects your business better in the long run.
Final Thoughts
This is a complex and sometimes uncomfortable topic. But ignoring it won’t make it go away. CRA is looking at these relationships more closely than ever, and misclassification can cost you.
If you want peace of mind, make sure your agreements, systems, and daily practices align with the model you’ve chosen. Independent contractor or employee, both can work. The key is clarity and compliance.