‘Driver Inc.’ employment practice puts more cash in company coffers, at expense of drivers’ benefits: critics
Trucking companies in Prince Edward Island and across Atlantic Canada want government to do more about a driver employment practice they say is worrying — and increasingly common in the region.
Those in the industry say the practice, dubbed “Driver Inc.,” is creating an “unfair playing field” for companies that do their business legitimately under Canada’s Labour Code.
Under the controversial arrangement, companies hire drivers as independent contractors — who do not own or lease their own trucks — instead of as employees.
This exempts those drivers from employers’ usual deductions for income tax, pension and employment insurance, allowing some trucking companies to pocket the portion they would have otherwise paid to employees.
But it means such independent drivers also don’t get benefits such as sick days, overtime, and holiday pay, and allows companies who practice the strategy to turn larger profits.
WATCH | This employment loophole has one P.E.I. trucking company concerned:
This employment loophole has one P.E.I. trucking company concerned
Until recently, the so-called “Driver Inc.” controversy has mostly involved companies in Ontario, and further west, with routes into the United States.
But industry representatives say some companies are also beginning to hire independent drivers in the Atlantic region.
McKee said the industry estimates that the employment practice may have cost the federal government as much as $1 billion in lost tax revenue.
Trucking companies are federally regulated employers, explains Employment and Social Development Canada’s website. As such, they “are prohibited from misclassifying employees in order to avoid their obligations” under the Canada Labour Code.
The regulations specify that “enforcement action” could be taken if “an incorporated driver who meets the criteria to be an employee is misclassified as a self-employed/independent worker,” the federal department said.
For local trucking companies like P.E.I.’s SFX Transport, it’s making it difficult to find drivers in an industry that’s already suffering from a labour shortage.
The company’s president and CEO, Andy Keith, said although independent-contractor drivers might be able make more money, they also forfeit their employment rights. Because of the last government revenues, “it starts to affect everybody, not just people in the trucking industry,” he said.
“We’ve had more and more drivers knocking at our door looking for work and they’re asking … [if] we do Driver Inc.,” Keith told CBC. “I don’t think they fully understand how it truly affects them.
“We do things the right way and the legal way. So we have to pay all those extra source deductions, we pay the taxes to the government, and those other carriers just aren’t.”
He said cutting corners financially also raises questions about the safety and maintenance of vehicles.
Penalties don’t have enough teeth
The issue particularly affects newcomers and temporary foreign workers in Canada, McKee said, because they may not be aware of their rights under the Canada Labour Code.
Several trucking companies have been scrutinized by the Canada Revenue Agency and Employment and Social Development Canada over their use of the practice. Penalties typically range from a warning and labour law education for a first offence, followed by fines if the federal agencies find a company continued the practice.
But McKee said existing enforcement doesn’t have enough teeth, and called for swifter and harsher government action.
“I’m optimistic but it’s also frustrating,” he said. “The longer the government drags its feet, the more risk we have of good upstanding carriers and members of our trucking community who may not be able to operate any longer because of this unfair advantage.
“We’ve seen this drag on for many years … and we haven’t seen this easing.”