Driver Inc. employers face $250K fines, labour minister warns
Nov 10, 2022
Trucking companies that use the Driver Inc. business model to misclassify employed truck drivers as independent contractors will face federal fines of up to $250,000, Labour Minister Seamus O’Regan, Jr. announced in Toronto on Nov. 7. Workers pay for social programs and businesses benefit from it, the minister said in Ontario Trucking Association offices, adding that almost all employers contribute. “We are putting the free riders on notice. They take advantage. We are going to hold them accountable for their wrongdoing, and where necessary, we are going issue fines to bad actors.”
The federal government had vowed in its Fall Economic Statement to take aim at Driver Inc. employers.
“In the trucking industry, there is a long history of companies using the misleading Drivers Inc. practice, whereby drivers are encouraged to self-incorporate and operate as independent contractors without being provided information on the downsides of the practice,” the feds wrote in the statement, delivered by Finance Minister Chrystia Freeland.
“By not classifying drivers as employees, companies are denying them access to important rights and entitlements under the Canada Labour Code, such as paid sick leave, health and safety standards, employer contributions for Employment Insurance and the Canada Pension Plan, and provincial or territorial workplace injury compensation.”
It indicated a recent pilot enforcement project found that more than 60% of federally regulated transportation employers fell into this category. The economic statement proposed to provide $26.3 million over five years, beginning in 2023, to take stronger action against non-compliant employers through Employment and Social Development Canada.
O’Regan said he wanted to make sure the fines “have bite and they hurt. I am talking about companies who are abusing workers’ rights.”
Employees not targeted
But the minister said the measures were not aimed at employees.
“There are a number of truckers who make the decision to be independent, to be contractors. That’s fine,” he said. “We are not aiming this at employees. This is aimed at bad employers, and not at employees of bad employers.”
O’Regan said many drivers live in fear and said the business model was a “hair’s breadth from forced labor.”
The minister, along with four GTA MPs, met with a delegation of the Canadian Trucking Alliance (CTA) and Teamsters Canada.
Federally regulated fleets will soon be required to offer employees 10 days of paid sick leave per year, and the minister acknowledged that will be difficult for businesses which follow the rules. He said it was important to ensure a level playing field, because some companies were abusing their workers by not giving them the same privileges and therefore not having to carry the same expenses.
The federal government has indicated further details will be included in the 2023 budget, and that Canada Revenue Agency will work with the transportation industry to raise awareness about the scheme.
CTA welcomes announcement
The CTA has long condemned the use of the Driver Inc. employment model and welcomed the announcement.
“On behalf of the CTA, its members, truck drivers and their families, we very much appreciated seeing the Government of Canada make stamping out Driver Inc. a top priority in the fall Economic Statement,” CTA president Stephen Laskowski said in a press release. “Driver Inc is an unlawful practice that involves gross labor misclassification, abuse of workers, forced labor and significant corporate tax evasion. We welcome the chance to work with the Government of Canada to stamp out this practice as quickly as possible.”
Beyond audits, penalties, and forced backpay, CTA recommended that all gross violating companies receive a second audit within 12 months of their initial audit to ensure compliance. If during the second audit the company is again found to be in gross noncompliance, the result should be – in partnership with provincial ministries – termination of their trucking licence, removal of plates from all trucks associated with the company, and the implementation of ‘ghosting protocols’, the alliance says.
CTA is also calling on ESDC to partner with all workers’ compensation boards (WCBs) and the CRA, to trigger CRA and WCB audits for gross violating companies. Gross violators must understand and appreciate the full impacts of their illegal actions.
The CTA estimates more than $1 billion in tax revenue is lost every year through the scheme. It launched dedicated websites at www.stopdriverinc.ca and www.stopponschauffeurinc.ca to help highlight the problem.
Speaking with TruckNews.com at the Atlantic Provinces Trucking Association’s annual meeting in Moncton, N.B., Laskowski added, “There is nothing wrong with PSB (personal services businesses) if you are filing properly. The issue is no one is filing as PSB.”
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