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THE QUESTION
For a few years, I’ve been hiring babysitters a couple of times a month to care for my children and offer an extra helping hand on busy days. I usually pay them in cash as it doesn’t amount to more than a few hundred dollars a month. But I’ve been relying on them more and more and I’m wondering at what point the babysitter becomes an employee. My babysitter is happy to keep receiving cash, which is technically under the table, but I don’t want to get either of us in trouble.
THE FIRST ANSWER
Jonquille Pak, Founder, JPak Employment Lawyers, Toronto
Typically, babysitters are considered independent contractors or self-employed individuals who work occasionally and on a short-term or casual basis. The point at which the babysitter becomes an employee from an employment law perspective depends on a variety of considerations:
- Exclusivity of the work relationship
- The length of time they have been working for you
- The number of hours they generally work
- The degree of control you exercise over their work routine
- Whether you schedule or control their work hours
- Whether you direct their various work activities
The parties’ own classification of the babysitter, for example, an agreement to designate them as an ‘independent contractor’ and agreed upon payment arrangements are relevant considerations, but will not be determinative.
The distinction between a self-employed individual and an employee is an important one. If the babysitter is an employee, this triggers certain tax, worker’s compensation and employment law obligations.
As an employee, they would be entitled to various protections under employment standards legislation, including minimum wage, overtime pay, public holiday pay, vacation pay and prescribed break periods.
Paying them cash under the table could be problematic from a tax perspective, because employers are required to withhold and remit taxes, CPP and employment insurance premiums from their regular pay. Cash payment could also pose issues with respect to record-keeping for hours of work and payment of wages. Additionally, under workers’ compensation legislation in Ontario, a sitter or nanny who works more than 24 hours per week is considered a domestic worker, requiring the employer to register with the Workplace Safety and Insurance Board (WSIB) and remit WSIB premiums.
THE SECOND ANSWER
Thuraya S. A. Lutfi, Lawyer & Investigator, Lutfi Law, Toronto
In Ontario, a babysitter hired occasionally and informally – such as a few hours a week on an ad hoc basis – is generally not considered an employee under the Employment Standards Act or for tax purposes. However, once the arrangement becomes regular, ongoing and directed by the parent (for example, fixed schedules, detailed instructions and long-term reliance), the legal relationship can shift from casual service to employment.
From a tax law perspective, the Canada Revenue Agency (CRA) uses a “control and dependency” test to determine employment. If you control the babysitter’s hours, tasks and work environment and the sitter is not running an independent business, the CRA may deem you an employer. This carries legal obligations, including payroll deductions for income tax, CPP and EI and filing T4 slips.
Paying in cash is not unlawful. However, failing to report those payments or to remit deductions is. Employers who pay “under the table” may face CRA audits, penalties and liability for unremitted taxes.
Additionally, in Ontario, the Workplace Safety and Insurance Board (WSIB) requires registration if a domestic worker exceeds 24 hours per week. Failure to register could leave you liable for costs if the sitter is injured.
The bottom line: occasional cash babysitting is generally permissible. But as your reliance increases, so does your legal responsibility. If the babysitting becomes regular and structured, it is prudent to treat the sitter as an employee to avoid tax, labour and insurance violations. Legal compliance protects both you and the person caring for your children. For advice on your specific situation, consult a licensed lawyer in the province where you live.
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