The federal government is looking to stop employers from misclassifying employees as a way to avoid source deductions or other labor obligations – a process the trucking industry has come to know as Driver Inc.
The commitment was made among other proposed updates to the Canada Labour Code, which hasn’t been updated since the mid-‘60s.
“In trucking in particular, we heard both from employer and employee groups that misclassification was a real challenge and created a sense of instability and an unlevel playing field,” Minister of Employment, Workforce Development and Labor Patty Hajdu said during an industry briefing.
“Our intent,” she said, “is to create a level playing field.”
“Employers hated it because it actually gave a competitive advantage to those other employers who were misclassifying people as ‘self-employed,’” Hajdu explained. Meanwhile, employees who thought there would be certain benefits to the structure began to realize that they were being “ripped off” once they actually began to pay the costs of being self-employed, and balanced those against the benefits of being an employee.
Her comments were made in the offices of Trillium Roadways based in Mississauga, which openly admits to incorporating about half of its 96 drivers.
Trillium president Jaspreet Samra says it’s the drivers themselves who request the payment structure, and he wants to transition all of them into the workforce as employees.
“The whole industry is like that,” he said of the growing number of drivers who want to be classified as independent businesses. “We offered both.”
The willingness to adopt the structure was needed for recruiting, he added. “It’s hard for us to maintain the drivers, keep the drivers.”
“We do think that it is unfair to the entire sector if some people are playing by different rules than others,” said Hajdu, noting that she first became aware of the situation about a year ago, during industry consultations in Woodstock, Ontario.
“Our industry is built around a lot of independent contractors who invest a lot of money to get into the industry by leasing and purchasing their truck,” said Stephen Laskowski, president of the Canadian Trucking Alliance. “That’s a big investment and a big risk. And investment is risk. The misclassification of someone who doesn’t have that risk is really unfair to the entrepreneurial spirit of those individuals.”
Shawn Baird of Sharp Transportation Systems struck out at those fleets taking advantage of the business model. Fleets that abuse the Driver Inc. model are not just avoiding taxes but also employer health taxes and WSIB payments, he said.