Feds know of 40 Driver Inc. fleets, penalties coming

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The federal government is aware of at least 40 businesses that are misclassifying employed truck drivers as independent contractors in a business model known as Driver Inc.

Employment and Social Development Canada (ESDC) plans to apply Administrative Monetary Penalties (AMPs) in the new year, using new legislative powers that include the fines and the ability to publicly name employers that don’t comply with the rules.

Parliament Hill
(Photo: iStock)

Work in 2021 has so far focused on education and awareness, said occupational health and safety officer Elizabeth Tavares, during an update for the annual meeting of Ontario’s Fleet Safety Council. But there has also been a key shift in enforcement practices, which have typically responded to complaints from misclassified employees.

“We’re doing proactive – which means that we’re identifying companies we’re aware are using or misusing the Driver Inc. model,” she said.

“At this point in time we’re not taking any enforcement action, but we will be taking enforcement action in the new year,” Tavares said. “We will be doing investigations or inspections at their site.”

A four-point test to see if someone is legitimately contracted for service includes control over work, the ownership of tools, the chance of profit, and the risk of loss. Other signs of misclassified employees include the presence of company uniforms, decals on tractors, and whether drivers have to follow company policies and procedures.

“We’re not just talking about the ownership of the tractor,” Tavares said, noting the regulators are looking at licensing authorities, Ontario Commercial Vehicle Operator’s Registrations (CVORs) and insurance, rather than simply a lease-to-own agreement on the truck.

If the fleet is providing the licensing and authority to perform the work, it’s seen as an employer-employee relationship – especially if drivers are working exclusively for the fleet.

“The right to exercise control is very important,” Tavares said. Perhaps the “biggest component” is whether the driver can be hired for multiple jobs rather than a single company.

“We’re not saying there are not legitimate owner-operators out there,” she said.

If ESDC finds that an employer is treating a worker like an employee just to avoid obligations under the Canada Labor Code, however, the employer faces the “burden of proof” to prove they’re right.

Federal labor standards cover things such as hours of work, vacation pay, holiday pay, sick leave, and protections against unjust dismissal.

Yet some drivers clearly prefer the business model, which sees pay delivered without source deductions.

ESDC personnel are “getting a lot of pushback” from employers and employees alike, she said.

“Working under the table is risky.”

It isn’t the only regulator looking to crack down on such operations. Ontario’s Workplace Safety and Insurance Board (WSIB) has set up an online portal to report Driver Inc. fleets.

“It’s good to hear we’re going to get some enforcement finally,” said John Farquhar, risk solutions specialist at Summit Risk Solutions. “I think you’re about to open up one hell of a can of worms here.”

One of the challenges is that many insurance companies will not cover single owner-operators, he added.

“This is really going to cause some grief in the industry.”

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John G. Smith is Newcom Media's vice-president - editorial, and the editorial director of its trucking publications -- including Today's Trucking, trucknews.com, and Transport Routier. The award-winning journalist has covered the trucking industry since 1995.

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  • The U K. Did the same truck drivers left as their take home pay dropped. To prevent the same thing in ont need to set pay rates for O T R and local drivers after they have 3000hrs experience

  • Im miss classified as independant contractor,but in reality im employee of yrc-yellow corporation in Canada,Im based in winnipeg. Mb,and Im a member of union,unifor local 4209 located in Winnipeg. Manitoba,I own my own truck ,but company drivers,real company employees are driving my truck,we are all on company payroll, and collective benefit plan.As you know independant contractors cannot join the union,they can’t be on company payroll or company group benefit plan.olso company drivers cannot drive independant contractors truck, all this is happening in this company since 1996. Right now its about 70 independent contractors in this company,it used to be 300 independant contractors.Somebody should do full investigation,and I can provide all necessary paperwork, including mine independant contractor agreement with yrc-yellow corporation. Thank you

    • Some owner operators join unions like at CN for example.
      Personally I do not need a Union and even more so, I don’t want to be represented by one again. One experience going back about 12 years, did not really work out.

  • The tax man cometh!
    Two things in life are for sure death and taxes and the government wants their cut either before or after you die but they will get their cut.

    I know of a few people working as driver Inc and they are neither Canadian citizens or permanent residents.
    They are not paying their share.

  • I think it’s time to shut this trucking industry down, you people think they know about trucking, you don’t know shit, you are screwing with the wrong industry, all your trying to do is make money off the industry,,, take your rules and shove them, All companies should shut down and you we see how important the industry is…

  • Just playing the devil’s advocate…are these “Driver Inc” fleets, ghosts? Why is it that Driver Inc company names are never mentioned, seemingly just whispered behind closed doors. And where are those ghostly company owners and managers? Why do they not come out of the closet and attempt to defend their practices? And what about the drivers who seem to be happy with their arrangement? Are they all presumed to be tax cheats? I find it hard to believe that anyone assumes that they can get away without paying taxes.
    Remember, “death and taxes”? Just wondering…

  • Hasn’t one of the main reasons for Driver Inc been ‘paying less (or no) tax’, so that everyone else has to make up for that? How would that be fair?

  • So you can go after Drivers inc companies and you have the staff for that but to monitor the MELT system your staff is limited. You care more about money than driver and public safety by allowing untrained drivers on the roads.

    • Well said same people who want do away with this do not want pay as a trade based on experience and overtime pay. The Largest companies did same in U K then with brevity unable to bring in enough cheap foreign drivers . This could make a short-term shortage of cheaper drivers.

  • Every time the government gets involved with trucking it ends in chaos. Remember back in the 80’s how Ontario “deregulated ” the trucking industry? It wasn’t deregulation, in truth it was re-regulation and it was a total mess. As a former owner-operator for many years I paid for my own truck, registered the truck in my name,
    paid for my insurance and every other damn thing owning a truck entails. By the time the government is done twisting legislation to suit every situation they can think of the trucking industry will again be in shambles. Not one civil servant has the faintest idea of what trucking is about.

  • The only thing that stalled this from happening a couple of years ago was Covid, glad to see it back as a focus, nice job OTA. I agree that these companies should be profiled and exposed as tax frauds, this is long overdue.

    • What you and many of the “Goverment Elite” fail to grasp is there are no insurance companies out there that will insure single Owner Operators working. If the Goverment wants to inflict this on the trucking industry, they MUST CREATE a Goverment Insurance Plan in any Province that now does not, at this time, have a program; where a single Owner Operator can insure his equipment.
      When sucha plan is created, and only then, should the Government start to crack down on so called ” Illegal Companies “

      • Well said many people who own their tractor and have move to B C because of insurance costs in ont. Ont needs a insurance company run like in B C or M B or Saskatchewan. Private insurance does not look our for injured workers like myself. In my opinion.

  • Drivers Inc is been around since the 90s and Truck News wrote about it then.
    Only 30 years and now……. they wont do anything. Same as the driver shortage its 30 years ongoing too.

  • The driver Inc model is not the tax haven the media likes to make it out to be. If you are following the law and reporting all of your income you are paying a substantial amount of tax, you have to pay quarterly hst installments, corporate tax as well as personal taxes, you have to pay your own cpp installments. Depending on your tax arrangement and the way you run your books there is a small degree of savings. Some drivers move around a lot and they like the freedom and flexibility and not being beholden to one employer constantly. The simple fact is truck drivers face a tremendous amount of risk while on the road, they could potentially rack up thousands of dollars In fines, they are subject to extremely strick hours of service regulations, many drivers spend countless unpaid hours waiting at the US Canada border. If my only option was to drive a truck for a chain company for 20 bucks an hour on a payroll I would rather take on no risk and go flip burgers at McDonald’s where I have virtually no risk or liability.

    The authors and government bureaucrats who write
    These articles critisizing Inc driver Inc model are stupid uneducated people who don’t know anything about the trucking industry.

    If I want to commit to a company and drive a company truck there is nothing wrong with that.

    If I want to lend my driving services to the highest paying owner operator there is also nothing wrong with that.

    If I want to buy my own truck and run my own authority there is nothing g wrong with that.

    Drivers are simply operating in a variety of different ways based on their skills ambitions and personal needs representing their own interests.

    I once worked for a really big company hanging drywall for a living on a salary.

    I decided to leave the company find my own customers and my own work as a single sole subcontractor.

    Am I now a tax cheat because I work alone and for myself?

    This critisizing of self employed truck drives is pure lunacy.

  • I was under the impression ‘Driver Inc’ was aimed at companies that contract ‘Drivers’.
    That is, those who worked as a contractor, yet drive company trucks. This avoids WCB, tax and EI deductions. This type of ‘contractor’ has been around for 45 years at least.

    This new angle of owning a truck that is licensed & insured by the Carrier changes the game. They might want ti second thunk this one.
    A ‘limited’ company should be able to operate as a lease/op contractor. Look at what has happened in California ports when the clamp down on the one truck operators

  • Sounds like someone has agendas against small honest business and hard working people Mr. Smith ? Or is it bothering you that owner operators drive their own trucks with pride and have a happy life ?
    Most owner operators are very hard workers and make sure that their jobs are done impeccably
    So screw you Mr. Smith !

    • Fix the insurance issues in ont so small fleets and owners ops an get insurance like in M B or B C. Also why do I see so many former truck drivers and former vets homeless in ont

  • Any trucking company that uses a third party who profits from hiring employees for the aforementioned trucking company is skirting laws and much more. These companies should be found out, and shut down. So should the company who is doing the hiring for these jerks