TORONTO, Ont. – A Toronto-based law firm is suggesting that a recent Supreme Court ruling may be the “final nail in the Driver Inc. model of trucking service” if it’s applied to a transportation-related case.
Fernandes Hearn’s comments were linked to a case involving Modern Cleaning Concept, and a ruling that involved distinguishing employees from independent contractors based on their degree of risk and ability to make a profit.
“Based on the latest test, the Driver Inc. model will not stand up and an individual will never be found to be operating as independent contractor,” Fernandes Hearn’s Rui Fernandes wrote in a recent newsletter, which was distributed by the Canadian Trucking Alliance (CTA). “Trucking companies should be aware that they are dealing with employees. For companies whose trucks cross provincial borders, the Canada Labour Code will apply.”
Under the Driver Inc. model, drivers are incorporated and receive their pay without any source deductions.
The Modern Cleaning Concept case involved cleaning and maintenance work through a network of franchises, and franchisee Francis Bourque had limited interaction with the clients he completed work for. After about five months, the franchisee became frustrated by the lack of profits and inability to develop business the way he wanted.
The resulting lawsuit for about $9,000 in unpaid wages made its way to the country’s top court.
“The Supreme Court of Canada agreed with the Quebec Court of Appeal, introducing the ‘business risk’ test. The critical factor distinguishing employees from independent contractors was held to be the respective degree of risk and the attendant ability to make a profit. The independent contractor, in attempting to generate profit, accepts the business risk. Employees, on the other hand, do not,” Fernandes said.
The Canadian Trucking Alliance, which has been fighting the Driver Inc. business model that classifies fleet employees as independent contractors, says “never-never leases” being used to create the illusion of an independent business will not withstand the risk plan. With a “never-never lease”, fleets lease trucks to those who are misclassified under a Driver Inc. business model – and never really hand over full control of the equipment.
“Unfortunately, the non-compliant element of our industry is resilient and steadfast in their determination to sidestep the rules and regulations,” said Canadian Trucking Alliance president Stephen Laskowski.
“We will never stop pursuing the end of Driver Inc. and we will continue to draw the full weight and attention of the enforcement community upon this practice.”
John G. Smith is the editorial director of Newcom Media's trucking and supply chain publications -- including Today's Trucking, trucknews.com, TruckTech, Transport Routier, Canadian Shipper, Inside Logistics, Solid Waste & Recycling, and Road Today. The award-winning journalist has covered the trucking industry since 1995. All posts by John G Smith