June 2015
NB: This document does not apply to associate agreements with other optometrists or physicians where both owner(s) and associate(s) practice together (although these associate optometrists may be considered “independent contractors” by the CRA for tax purposes).
Since the revised Professional Misconduct Regulation, Ontario Regulation 119/94, came into force in April 2014, members have been regularly contacting the College with questions about the independent contractor relationship. Two important considerations in determining whether an optometrist is an independent contractor are risk and control. Optometrists who practise as independent contractors operate their own businesses and must take responsibility for doing so. This means that they bear the financial risk of the practice, along with the corresponding opportunity to profit, and have control of the practice. If they do not, they will be in a conflict of interest.
Risk
One of the primary financial risks that an independent contractor must accept is the overhead expense related to the operation of his/her practice. A signed independent contractor agreement must therefore include terms for reasonable rent. Reasonable rent should be calculated based on considerations that include, but are not limited to,
- area (ft2) of space used;
- equipment provided by the corporation (usually fixed equipment);
- utilities; and
- shared staffing.
Rent cannot be related to the volume of business conducted, and therefore cannot be paid daily, weekly, or irregularly. Rental terms must be fixed and involve regular payments, typically monthly and without interruption.
If a rental agreement is not calculated with consideration to the above, the optometrist would not be considered an independent contractor and could be considered in conflict of interest.
Control
Members must control all aspects of their practice to be independent contractors. This includes setting the fees they charge, deciding who they accept as patients, storage and maintenance of records, the hours and days they work, and vacation time.
Conduct Trumps Contract
Simply putting the required terms from the regulation (O. Reg. 119/94) in a contract is not sufficient to comply with the conflict-of-interest provisions. Independent contractor optometrists must act in keeping with their contracts and actually practise independently to demonstrate that they are not practising in a conflict of interest.
Optometrists working as independent contractors may be asked by the College at any time to provide a copy of their written agreement, along with proof that they are acting in accordance with the agreement. In cases related to conflict of interest, the ICRC has already required members to submit independent contractor agreements and proof of rent payment for verification.
The College will consider an optometrist who has assumed no financial risk in his or her practice or who has no or limited control of his or her practice to be in conflict of interest. This is professional misconduct and such allegations can be referred to the Discipline Committee.
Additionally, the Canada Revenue Agency (CRA) may consider an optometrist without risk or control in his or her practice to be an employee, not an independent contractor. Such a determination by the CRA may lead to financial penalties to the optometrist and/or the corporation. Recently in Ontario, CRA has conducted audits of physiotherapy clinics. In some cases physiotherapists who believed that they were working as independent contractors were found to be employees. CRA concluded that they did not bear enough financial risk or have enough control of their businesses. The physiotherapists and clinic owners were ordered to pay penalties as well as retroactive income tax, CPP, and EI deductions.
More information about independent contractor and conflict-of-interest provisions under the Optometry Act can be found on the College website.