Canadian truckers raising red flags over labour misclassification
Dec 21, 2022
The Saskatchewan Trucking Association is calling out companies using a labour misclassification called Driver Inc. that they say is allowing companies to skip out on providing labour rights and entitlements to employees.
The organization said a pilot project was set up in Ontario and found 60 per cent of federally regulated transport companies were using employee misclassification.
It adds that this misclassification is equating to more than $1 billion in unpaid taxes lost due to this scheme.
John Blackham, director of policy and public affairs with the Canadian Trucking Alliance, explained the structure of the trucking industry, and how this scheme is bending the rules.
“Of course, there’s employees, we also have independent contractors which we call owner operators, both have existed for many, many years, and are accepted in the industry,” Blackham said.
“What Driver Inc. really is is a break from both, where drivers are encouraged to incorporate themselves, and then in turn sell their driving services to the carrier.”
He said these people don’t lease or own their own vehicle, they drive a company vehicle, and are almost indistinguishable from another employee.
Blackham said there are some negative implications that come with these new positions.
“For the tax base itself, we’re talking about the potential loss of income tax, we’re talking about lost revenue for programs like CPP and EI. And from the workers’ end, we’re also talking about lost entitlements like overtime pay, vacation pay, paid medical leave which is the 10 paid sick days which is coming in, and countless other benefits afforded to employees under the labour code.”
He said the Canadian Trucking Alliance has been raising the red flag on this subject for the past five years, noting that it’s been spreading aggressively within the last three to four years.
Blackham said employers are saving around $25,000 per driver using this method.
He added some of these employees may not even know they’re caught up in the scheme.
The Saskatchewan Trucking Association noted that this scheme could end up pushing compliant companies out of business.
Robert Penner, President and CEO of Bison Transport, said there’s a disadvantage for recruitment and hiring due to this scheme.
“The Driver Inc. model is dependent on individuals declaring their income and filing their own taxes, making their own worker’s compensation payments and the like,” Penner said.
He said a carrier might not submit a T4a, and if that worker doesn’t voluntarily complete a tax return the Canada Revenue Agency may never find them.
“It’s hard to recruit drivers. Many are familiar with that program and it gives them significantly higher take home pay.”
He said companies can price their business better than compliant companies if they use that model, noting that Bison Transport’s highest expense next to fuel is driver pay.
Penner said he’s optimistic about government response to this scheme, but added that he won’t be satisfied until enforcement is in place and the dollars owed are paid back.
“You can’t enjoy the benefits of living in Canada without paying your share.”
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