The Canadian Trucking Alliance (CTA), representing the voice of the trucking industry, is urging the federal government to reconsider what they refer to as a $1 billion fraud.
This fraudulent activity, termed “Driver Inc.” by the CTA, involves companies misclassifying drivers as independent contractors rather than employees to evade payroll taxes. Stephen Laskowski, the president and CEO of CTA, stated, “In some regions of Canada, at least one-third of companies and drivers are involved in this, which has a dual negative impact on society.” He emphasized that these are taxes not contributing to the economy and also give misclassified drivers about a 30% market advantage.
Laskowski described Driver Inc. as a tax evasion scheme where companies deliberately misclassify drivers. This misclassification deprives drivers of labor rights such as fair wages, overtime, vacation pay, and safety protections. In 2021, the government made it illegal for federally regulated employers to misclassify workers, imposing penalties for non-compliance.
Need for Stricter Enforcement
In a response to CBC, Employment and Social Development Canada (ESDC) noted that regulations were intensified in 2024, making employers responsible for proving that a worker is not classified as an employee. However, Laskowski insists that more stringent action is required, labeling Driver Inc. as the most significant current threat to the industry, even overshadowing the Canada-U.S. trade tensions.
Targeting Vulnerable Workers
Driver Karanveer Singh concurs about the lack of enforcement against offending companies. After moving to Canada from Punjab, India, as an international student, Singh was misclassified as an incorporated driver by two of his first employers. Although he managed to prove his misclassification to the Canadian Labour Board, he was only able to recover the funds from one company, while the other still owes him nearly $40,000.
Complex Issues in the Industry
The CTA proposes lifting a moratorium on penalties for incomplete service fee reporting in the T4A tax slip to assist the CRA in identifying and auditing companies using incorporated drivers. Yet, this could lead to additional delays in an already overwhelmed system, according to Ottawa tax lawyer Dean Blachford.
Impact on Compliant Businesses
Mark Seymour, owner of Kriska Transportation Group in Prescott, Ont., argues that the Driver Inc. model is jeopardizing compliant companies. He claims the issue is well-known: “It’s out of control.” With decades of experience in the industry, Seymour believes fair competition necessitates similar tax obligations and employee treatment across the board.
Widespread Safety Concerns
Phil and Francie Langevin, owners of P.A. Langevin Transport, share concerns about the safety implications in an industry where companies operate under the Driver Inc. model. Francie remarked, “When you see a transport truck beside you on the highway, how safe are you really?” Singh echoed these safety concerns with personal experiences involving inadequate training and supervision in companies operating this model.
Government Response
In defense, the ESDC asserted it is taking action by forging an information-sharing agreement with the CRA for better enforcement. Furthermore, a dedicated team of inspectors in the road transportation sector has conducted approximately 540 inspections and held 320 educational sessions across the country since 2023.
