Why shippers need to pay attention to recent enforcement developments
For the first time in years, the federal government is following through on promises to get serious about enforcing laws regarding the misclassification of drivers. That should lead shippers to take a close look at those who haul their freight — and consider locking in capacity with carriers that comply with such laws.
The Canadian Trucking Alliance and its related provincial member associations have lobbied against the so-called Driver Inc. scheme for years. They say a significant portion of trucking companies use incorporated drivers (those who are employees in every other sense) to operate company-owned equipment as a way to reduce costs by skirting payroll deductions.
Drivers often prefer the model because there has been little oversight as to how – or if – they pay income taxes, critics allege. Those who support the model say it’s about freedom of choice. Of course, drivers adopting this payment method also forgo legal labor rights that are there to protect them, as well as employment benefits such as vacation pay and paid sick days.
A moratorium T4A slips – in effect since 2011 in response to pushback from businesses that didn’t want to issue T4As for all service payments – was lifted for the trucking industry in the recently passed federal budget. At the same time, the feds promised to crack down on the misclassification of drivers in the trucking industry. Yeah, yeah. We’ve heard that before.
But this time things feel different. There seems to be actual enforcement taking place. And with teeth.
This has rattled the Canadian Truck Operators Association (CTOA), which claims its member carriers are facing the brunt of direct enforcement.
In a press release issued this week, CTOA said 60% of its Toronto-area members have received Employment and Social Development Canada (ESDC) inspection notices, with many given just 48 to 72 hours to respond.
CTOA argues the timing couldn’t be worse, in peak freight season with the industry under pressure from U.S.-imposed tariffs on Canadian goods. It characterizes this as “the most economically fragile time in a decade” and says the short notice given fleets subject to ESDC inspections is “unreasonable, punitive and disrupts operations during peak season.”
But you know who’s not being disrupted? Carriers who refuse to engage in the misclassification of drivers.
Derek Koza, president of Wellington Group of Companies, said his company welcomes scrutiny of its employment protocols. In a LinkedIn post this morning, he urged carriers to: “Audit your classification practices. Clean up your contracts. Make compliance a selling feature, not an afterthought. When enforcement hits full stride, the companies that have been doing it right won’t just survive, they’ll lead.”
Shippers need to be aware that many of the low-cost carriers they’ve relied on during this three-plus year industry downturn are already strained to the limit. If they have survived the industry’s most persistent downturn on the merit of misclassifying company drivers as independent contractors, then their days may well be numbered.
There is an abundance of capacity in the market and has been for some time. An enforcement crackdown on driver misclassification won’t cause a supply chain crisis. (We were told the 2023 bankruptcy of Yellow Freight and the loss of its 30,000 drivers would do so, but the capacity was absorbed by the market in a hot minute).
A driver misclassification enforcement crackdown, however, may spark a capacity crisis within shipper organizations that have turned a blind eye to the employment law violations committed by the carriers that haul their freight.
The time for shippers to audit their carrier base is well overdue, particularly if they hang their hats on environmental, social and governance (ESG) policies. (Let’s not forget the S and the G in ESG.)
Another reason shippers need to be more attentive to who’s hauling their freight comes from south of the border, where a crackdown is underway on illegally issued non-domiciled commercial driver’s licenses and drivers deemed to lack English language proficiency.
There, U.S. Secretary of Transportation Sean P. Duffy, has warned shippers that the DOT could come after them directly if they use such drivers to haul their freight.
“I will hold trucker companies and shippers that load up big rigs ACCOUNTABLE! A company can’t hire a trucker and do it knowing they can’t speak English,” Duffy posted to X on Oct. 31, after an appearance on FOX News in which he threatened the same.
For too long, shippers have willfully ignored the question of whether the carriers that handle their freight comply with employment and safety regulations. They do so now at their own peril, as enforcement on both sides of the border appears to be getting real.
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The following was sent to trucknews.com by CTOA in response to the above blog:
Subject: Response to Editorial on Enforcement, Industry Narratives, and Shipper Risk
Dear Editor,
Your recent editorial raises important points about compliance in the trucking industry, but it also adopts a narrative that could unintentionally harm the very supply chain Canada depends on. CTOA fully supports fair labour practices, proper classification, and transparent operations.
Compliance is not optional, and reputable carriers, including our members, understand that. Our concerns relate not to enforcement itself, but to how enforcement is being executed, with many carriers receiving 48–72 hour notices during peak season, creating unnecessary administrative and operational strain. More importantly, we must address the framing of your editorial, which suggests that shippers should distance themselves from certain carriers and implies that GTA-based operators are “bad actors.”
This narrative is not only inaccurate, it is dangerous. The Greater Toronto Area is one of the largest freight hubs in North America and an economic engine for Canada. Painting an entire region or segment of carriers with a negative brush risks undermining confidence in the national supply chain. It also ignores the fact that concerns around timelines, clarity, and shifting interpretations of classification rules are being raised across the industry, not only by CTOA members.
We caution against narratives that divide the industry into simplistic categories of “good carriers” and “bad carriers.”
Such framing can:
● unfairly damage the reputation of compliant businesses
● disrupt shipper relationships based on fear rather than facts
● create instability in freight movement and delivery timelines
● amplify discriminatory perceptions used by some groups to gain market advantage
Shippers should indeed be attentive, but they should also be mindful of why some voices may be promoting these narratives, and whose interests they ultimately serve.
Canada needs a strong, united transportation sector. That requires fair enforcement, clear guidance, and balanced public commentary that does not stigmatize entire regions or push shippers toward decisions that may unintentionally strain the broader supply chain. CTOA remains committed to constructive engagement with government, industry, and shippers to ensure regulations are applied fairly, consistently, and in a way that protects both workers and the stability of Canada’s freight network.
Sincerely, Canada Truck Operators Association (CTOA)
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I worked in a trucking company office our payroll was ready to inspect at anytime had 3 yrs of payroll and lease ops available with 30 minutes notice
i am so glad to hear this great news for years drivers could not get hired by theys trucking companies because we they wanted to hire us as sub contractors so many guys got let go and never got paid for weeks of work
CTOA, You can change your drivers to Employees or true Owner Operators so there will be no shortage of Equipment for the Supply Chain, but everyone will be operating on a Level Playing Field. And Canada Revenue will receive it’s fair share going to roads , hospitals and schools.
And then uncle Doug Ford shows up with Driver Inc . Parent organization to show support for their tax avoidance schemes. Remarkable!
Why is Wellington using carriers that use incorporated drivers especially in Quebec to cover all their local loads? Shouldn’t they stop using these carriers if they have an issue with them? I wouldn’t throw rocks from a glass house. See carriers with run down and broken trucks daily pulling their trailers. I wonder how many of them get stopped at scales.