Driver Inc. penetrating into Atlantic Canada, APTA warns
The Driver Inc. companies are raising their head in Atlantic Canada, warned Chris McKee, executive director of the Atlantic Provinces Trucking Association (APTA).
This business model, where trucking employers misclassify employees as independent service providers, “is not good for our industry, illegal, not a level playing field, and detrimental to carriers that go by the book,” he said during APTA’s conference in Charlottetown on Oct. 19.
He explained that these companies offer to take loads under cost in some cases. He claimed they are using the money saved to grow their business, buying infrastructure, property, and equipment.
Trevor Bent, APTA’s past chairman said it is increasingly important to squash the practice to maintain a competitive balance within the marketplace. He added that carriers that have been in business for decades are going to have to make tough decisions.
Skirting responsibilities
Bent slammed the corporate misclassification saying, “The practice of creating corporations to skirt your responsibilities – payroll, tax remittances – is not lending to an overall healthy environment within the trucking industry nor is it lending to a positive sustainable one socially.”
Seeking additional enforcement
Geoffrey Wood, senior vice-president, policy, Canadian Trucking Alliance said the Canada Revenue Agency and Employment and Social Development Canada (ESDC) are doing a lot of work but more needs to be done. “That’s all we are asking for, we want the law enforced,” he said.
He added that a third of the industry is engaged in the Driver Inc. model of business.
McKee said, “Even if they end up going legit, they have built their business on the back of an illegal business model.” He added that he had held a meeting with ESDC auditors, asking them to add teeth to enforcement.
Bent noted that Nova Scotia welcomed 12,000 new residents in the last three months. He said this puts pressure on the health system, infrastructure, roads and schools. “It’s moving beyond a trucking issue, it is now a social issue,” he warned.
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It’s not right. It affects the entire social system. Medical systems and more individuals on the system with less income to support it.
Driver Inc should be outlawed. If you bought your own truck, authority, actually pay all expenses etc fine. But these companies that put their drivers in peril without workers compensation, medical benefits, life insurance etc with the lure of these employees making more money must be outlawed
There is nothing illegal with Driver Inc., so outlawing it is a ridiculous premise on its face. Done properly, and legally, the independent contractor model remains a staple of individual entrepreneurship. Part of the Canadian Dream if you will.
However, as the OTA and the CTA have pointed out to the public many, many times, a properly structured Driver Inc. model does not garner the independent contractor, in the transportation business, any additional income, and only exposes them to the lack of benefits enjoyed by full time employees.
On the other hand, the Driver Inc. model is a tremendous advantage to the carriers that put forth this agenda. On average they save about 20% of their payroll obligations by not paying the associated taxes. 20% of 30% of a carrier’s overall cost structure is a lot of money.
The reality about enforcement is that it is a farce. Government auditors, regardless of the department they come from, are like electricity let out into the wild. They will find the path of least resistance. That is to say they will target well known carriers, because they are easy to find, their books are well kept, and easy to audit. It is highly unlikely government auditors will scour the back streets of major cities, looking for Driver Inc. violators.
Mike McCarron previously wrote, in this magazine, an excellent editorial on the subject a few months ago. In his article, McCarron postulates, and there is no reason to believe this is not true, that even if you get caught using Driver Inc., as long as you have over 6 trucks, you will still be in the black after you endure the audit, and pay the fine. Simply, the cost of doing business.
A quick Google search reveals there are 7,348 trucking companies in Canada. One third, according to this article, or 2,425 carriers, are engaged in Driver Inc., and that is just the trucking industry. The independent contractor model is rampant throughout all sorts of different businesses throughout the economy, from hair dressers to C-Suite executives. The chances that all government departments, let alone a single one, or a select few of them, putting an end to Driver Inc. is very, very, very small.
The only real hope that this industry has for putting an end to Driver Inc. is education. It is incumbent upon every driver, company employee, and company executive, to educate everyone they come in contact with as to the perils of Driver Inc.
Trucking is at a crossroads. We, the industry and its participants, either have to stamp out Driver Inc. immediately, or join the fray.
Until truck drivers see benefits in being payroll employees more and more will become lease ops
Owner ops are saving about 7 to 8 percent in taxes compared to payroll truck drivers. If the large trucking companies want truck drivers to be on payroll bring in a fair wage offer that will support a family with 3 children pay rent or house payments and pay for one modest new minivan each 8 yrs. I volunteer with homeless disabled people too many of them have been payroll truck drivers. Bring in a tiered wage of 1.6 times min hourly wage for local truck drivers after 2 yrs or 5000 hrs of experience and 1.9 times min wage for O T R truck drivers plus a medical care plan for Cross border truck drivers. Also work the different trucking companies to develop a better parking plan with temporary health care and housing for sick and injured truck drivers and Uber and taxi drivers. The problem is the current take home pay of a payroll truck driver will not support a family like 45 yrs ago. The the trucking companies brought in cheaper foreign drivers who became driver inc in a desperate attempt to pay rent and support up to 4 children in some cases.