Occupational therapist payroll: one real contractor question, two WSIB hats

The associate question is the only one worth debating

A COTO-registered associate who sets their own hours, carries their own professional liability coverage, and sees clients across more than one practice has a real claim to self-employment, and many percentage-split arrangements are built exactly that way on purpose. Front-desk staff, practice coordinators, and any therapist who works the practice's hours, on the practice's clients, under the practice's supervision, are employees regardless of what the engagement letter calls them. A practice that has been paying an in-house therapist by invoice because "OTs are contractors" is usually looking at retroactive CPP and EI on both shares, plus penalties, and the cheapest time to fix that is before someone leaves and applies for EI.

• Points toward contractor status: owns or leases their own treatment equipment, carries independent liability coverage, bills more than one clinic, and sets their own fee for private clients.
• Points toward employee status: uses the practice's equipment and booking system, follows a schedule the practice sets, and has no real chance of profit or risk of loss beyond hours worked.

Most percentage-split associates land somewhere on that spectrum rather than cleanly on one side, which is exactly why the underlying paperwork — the split agreement, the insurance certificate, the fee schedule — has to actually match how the arrangement runs day to day, not just how it reads on paper.

WSIB wears two hats in this business

Health care is one of Ontario's mandatory Schedule 1 industries, so an OT practice with employees is very likely required to register for its own WSIB coverage and remit premiums on its payroll — a completely separate obligation from being the provider who bills WSIB's fee schedule to treat someone else's injured worker. Because the word "WSIB" shows up on both sides of the business, it is common for a practice to track the receivable carefully and forget the premium account entirely, or the reverse. Insurable earnings for premium purposes are reported against the practice's own rate group, and that rate is a real cost of running a payroll, not just a compliance checkbox filed away after the first year.

Mileage that stays outside taxable income

Employed OTs travelling between home visits from a fixed base can be reimbursed at a reasonable per-kilometre rate without that reimbursement becoming taxable income, provided a trip-by-trip log supports the claim and the rate stays within what CRA considers reasonable for the year. A flat monthly car allowance paid instead of a per-kilometre rate is treated differently by CRA and usually has to run through payroll as a taxable benefit, which is the mistake we see most often when a practice tries to simplify mileage into a round number. The same logic applies to a mileage top-up paid on assessment days, when a therapist drives further than usual to a client's home for a one-time evaluation.

Benefits and retention for treating staff

Group benefits and RRSP matching are common retention tools once a practice has more than one or two employed therapists, and both need to be set up correctly against payroll from the start: employer-paid group life premiums create a taxable benefit that shows on the T4, while an employer-paid health and dental plan generally does not in Ontario. Employer-reimbursed continuing education for an employed therapist is usually a straightforward non-taxable business expense reimbursement, but only if it is structured as reimbursement against receipts rather than a flat allowance folded into pay.

Casual and part-time staff for a schedule that is not 9-to-5

Home-visit and school-contract practices often run on a patchwork of casual and part-time OTs and support workers booked around client availability rather than a fixed roster. Every one of them still needs a T4, a Record of Employment when the engagement ends, and vacation pay calculated correctly under the Employment Standards Act even when the hours are irregular week to week — the informality of the schedule does not relax any of the formal payroll obligations behind it.

For the classification test itself, see our answer on how the CRA decides employee or contractor. Where a practice also has US-trained staff or the occasional TN-visa question, that sits on our OT cross-border tax page; for the payroll setup itself, see our payroll services page.