The federal government is promising to crack down on allegations of widespread fraud in the trucking industry, a phenomenon that has become known as “Driver Inc.”
Jobs Minister Patty Hajdu told a House of Commons committee Thursday the government has set aside millions to deal with what experts say is the widespread misclassifying of truck drivers as independent contractors rather than employees to exploit tax and labour law loopholes that benefit employers.
This practice — “Driver Inc.” — has also been described as a threat to public safety out of fears those same companies will also cut corners on driving training, maintenance and safety protocols.
“The ultimate goal is to make sure that we send an even stronger message to the cheaters out there that we’re going to find you and we’re going to protect the good actors,” Hajdu said.
MPs on the House of Commons transport committee have heard testimony so far from trucking associations, police officers, unions and others concerned about “Driver Inc.”
“Driver Inc. has weakened our industry from a safety, labour and competitive standpoint. This is a crisis of fairness, safety and the rule of law: If you follow the law, you lose; if you cheat, you win. Right now in Canada’s trucking industry, the cheaters are winning,” Chris McKee, executive director of the Atlantic Provinces Trucking Association, told the transport committee earlier this month.
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He said that the companies that follow the rules are struggling to stay afloat and have laid off staff and reduced benefits to compete with the fraudulent companies.
“I want to be very clear: misclassification is exploitation,” Hajdu said Thursday. “It strips workers of their rights and it creates an uneven playing field for the many honest companies that follow the rules.”
She said the government will spend $77 million over four years and $19.2 million annually for the Canada Revenue Agency (CRA) to implement a compliance program and lift the moratorium on enforcement of T4A slips in the trucking industry.
The moratorium on T4A penalties was first implemented by the Harper government in 2011. The “Driver Inc.” problem has become pervasive since then, experts say, especially affecting temporary foreign workers.
“Too often it is vulnerable workers who are hit the hardest. Many of them are newcomers to Canada who have trusted that the system will protect them,” said Hajdu.
In 2023, the federal government spent $26.3 million to fight misclassification and created a team to investigate it.
So far, the team has investigated 650 employers and found 130 cases of misclassification. According to Hajdu, about 80 per cent of the employers found to be non-compliant have voluntarily agreed to properly classify drivers.
Bloc Québécois MP Xavier Barsalou-Duval questioned Hajdu about the government’s previous work on this issue, describing it as a “drop in the bucket” compared to the prevalence of employee misclassification.
“On the ground, we don’t see any changes. You’re talking about what happened in 2023, and you talked about a few hundred inspections but there are thousands of truckers out there, and fraud is rife throughout the industry,” said Barsalou-Duval.
According to Hajdu, the work to crack down on “Driver Inc.” also includes educating individual drivers about their rights and the creation of a new agreement between the CRA and Employment and Social Development Canada (ESDC) to share information to enforce the labour code.
Earlier this month, MPs on the transport committee heard testimony that the “Driver Inc.” mentality at some trucking firms also leads to some dangerous practices.
Véronique Gagnon, the vice-president of Transport St-Pamphile Inc., told the committee that her drivers have witnessed “Driver Inc.” drivers pouring windshield wiper fluid on the ground to gain traction and struggling to open their truck hoods.
“These people lack knowledge. They are dangerous, they don’t respect driving hours, they don’t pay their fees, they don’t maintain their equipment, they aren’t insured, and they’re all underpaid. All of these factors allow them to reduce their rates, which leads us, the proud carriers who respect the law and other road users, straight into a wall,” she said.
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