Cleaning company payroll: the subcontractor trap, and how to stay out of it

Why cleaning is ground zero for reclassification

Cleaning fails the contractor tests more predictably than almost any industry, because the business model concentrates control in the company. You assign the sites and the hours, you supply the chemicals and equipment, the client contract is yours, and the cleaner cannot raise a price or lose money on a job — under CRA's factors that is employment, and the signed "independent contractor agreement" carries almost no weight against it. The usual trigger is not a random audit: it is a cleaner who files an EI claim after being let go, or asks for a CPP/EI ruling, and the answer then applies to everyone doing the same work.

The bill arrives in layers: both shares of CPP and EI assessed retroactively with penalties and interest, vacation pay claims under the ESA, and WSIB premiums on everyone it deems a worker. Converting voluntarily is dramatically cheaper than being converted — we price the true payroll cost per contract first, so the switch does not sink your margins.

Employee or genuine subcontractor: the signals

Some cleaning subs are real businesses. The file should show it:

Where a relationship genuinely sits in the right column, keep the evidence current — their invoices, their WSIB account, their insurance certificate. Where it does not, a T4A does not fix it; payroll does.

Split shifts, travel time and multiple sites

Multi-site scheduling creates paid time that many cleaning companies never record. In Ontario, travel between client sites during the day is working time — only the commute at each end is not — so a cleaner covering three buildings is on the clock between them, and a per-kilometre reimbursement at reasonable rates stays off the T4. Split shifts are legal, but the hours rules still apply: 11 consecutive hours free from work each day, and eight hours between shifts unless the combined shifts stay within 13 hours or the employee agrees in writing. Short call-backs are caught by the three-hour rule. We connect a time-tracking app like QuickBooks Time or Deputy to the payroll run, mapped by site, so hours are provable and every contract shows its true labour cost — the same per-contract view our cleaning business bookkeeping reports on monthly.

WSIB: the classification that makes or breaks the margin

Cleaning is covered employment, so register with WSIB when you hire your first worker and expect premiums to be one of your larger payroll costs — janitorial rate classes are priced for the injury profile of the work. Two traps recur. First, WSIB runs its own worker-versus-independent-operator analysis, so "subs" without their own coverage are deemed your workers and premiums are assessed on what you paid them, retroactively. Second, insurable earnings are reconciled annually, and growth between filings catches companies undercharged. We keep the classification, the sub evidence, and the reconciliation in one file so a WSIB audit is an afternoon, not a season.

Running payroll at cleaning-industry turnover

High turnover is the operating condition, so the machinery has to be fast: TD1s collected digitally at onboarding, direct deposit from the first cheque, vacation pay at 4% shown on every stub with written agreement, and ROEs filed through ROE Web within days of each departure. Wagepoint handles this shape of workforce well, and EHT only enters once Ontario payroll clears the $1 million exemption. If you operate under a US franchise brand, the royalty and franchise-fee payments heading south carry their own withholding questions — that side lives in our cross-border tax work for cleaning businesses, and your payroll data feeds the royalty base it starts from.

Source: CRA — Employee or Self-Employed? (RC4110).