Hiring a caregiver directly - without going through a licensed provider - seems straightforward and cheaper. Post an ad, interview a few people, agree on a rate, and start. What most Ontario families don't realise until something goes wrong is that this arrangement comes with legal obligations that carry serious financial consequences, and no safety net when care falls apart.
This guide is not an argument against private hiring in every situation. It is an honest explanation of exactly what you are taking on when you become a private employer in Ontario - so your family can make an informed decision before a crisis forces the issue.
You become the legal employer
Under Ontario's Employment Standards Act (ESA) and federal tax law, a person who pays someone to provide regular services in their home - at set hours, in a specific location, using the family's equipment and following the family's instructions - is an employer. This is true even if:
- The arrangement is described as "contract" or "self-employment"
- Both parties sign an independent contractor agreement
- The caregiver says they prefer this arrangement
- No employment contract is ever signed
Canada Revenue Agency (CRA) assesses the actual working relationship - not the label. Home care situations almost always meet the CRA criteria for employment. Calling someone a contractor does not protect you from employer obligations.
WSIB liability: the biggest financial risk
The Workplace Safety and Insurance Board (WSIB) provides compensation for workers injured on the job. If you employ a caregiver - even informally - you may be required to register with WSIB and pay premiums. More critically, if the caregiver is injured in your home and you are not registered, you may be personally liable for their full compensation - medical costs, lost wages, and long-term disability.
Home care involves real physical risk. Caregivers lift and transfer clients, assist with bathing on wet floors, manage mobility aids, and perform tasks in unpredictable environments. Back injuries and slips are common. A single serious injury claim can cost tens of thousands of dollars.
When you hire through a licensed provider, WSIB coverage is the provider's responsibility - not yours. The moment anything happens in your home, it is their claim, not your liability.
Payroll obligations: CPP, EI, and income tax
As a legal employer, you must:
- Deduct Canada Pension Plan (CPP) contributions from the caregiver's pay and remit both the employee's and employer's share to CRA
- Deduct and remit Employment Insurance (EI) premiums, again both shares
- Deduct and remit income tax on the caregiver's behalf
- Issue T4 slips at year-end
- Maintain payroll records for CRA audits
Penalties for failure to remit are steep: 10% of the unremitted amount, plus interest, applied per period. CRA audits of domestic employer arrangements are not uncommon - particularly when a caregiver files for EI and CRA discovers no employer remittances were made.
No backup coverage - the operational risk
The risk families feel most acutely is the simplest one: what happens when the caregiver doesn't show up? With a private hire, the answer is: nothing. There is no roster to draw from, no on-call coordinator, no provider to call at 6 a.m. on a Sunday.
Families who rely entirely on a private hire typically discover this problem during a family crisis - when the caregiver is sick the same week a family member is also dealing with an emergency. The person who needs care has no coverage. The family scrambles. Sometimes this triggers a premature move to a care facility that did not need to happen.
Background verification is your responsibility
When you hire privately, you are responsible for verifying the caregiver's credentials and conducting background checks. A Vulnerable Sector Police Check - required for anyone working with vulnerable adults - must be requested by the employer and paid for. References must be checked. Training must be verified.
Many families skip this step, particularly when a caregiver comes through a personal referral. A referral from a trusted source is not the same as a verified background check. The College of Personal Support Workers maintains a register of registered PSWs - use it to verify any claimed PSW credentials.
Frequently asked questions
What happens if a private caregiver reports me to CRA for not deducting taxes?
CRA will assess you as the employer for all unremitted amounts - employee deductions you were required to withhold, plus your employer share of CPP and EI. Penalties of 10% of the unremitted amount apply per period, plus interest. CRA can go back several years. The total exposure can be substantial.
Is a signed contractor agreement enough to protect me?
No. CRA assesses the actual working relationship, not the document. If the caregiver works regular set hours in your home, follows your instructions, and uses your equipment, they are legally an employee - regardless of what the agreement says. Courts and CRA routinely disregard contractor agreements in domestic employment situations.
Do I need WSIB if I only hire a caregiver a few hours a week?
WSIB coverage requirements in Ontario depend on the type of work and the hours, not just whether the worker is an employee. Home care workers - even casual or part-time ones - may trigger WSIB obligations. The WSIB website has an employer registration tool. If in doubt, consult an employment lawyer before an incident occurs.
What if the caregiver says they prefer to be paid cash?
Cash payment does not change your legal status as an employer or reduce your obligations. It may actually increase your CRA risk - cash payments are more likely to be flagged. The caregiver's preference about how they receive payment has no bearing on your payroll obligations under the Income Tax Act.
How is private hiring different if the caregiver is a family friend?
The legal obligations are identical. The personal relationship does not change your employer status. However, families who hire trusted individuals often skip background checks and written agreements - which creates additional risk if the relationship sours or if the person's performance does not meet care needs.