Misclassification tactic raises concerns about safety, tax evasion, and labour rights
In Canada's bustling trucking industry, a controversial employment practice known as "Driver Inc" is raising concerns about safety, tax evasion, and labour rights.
"In a nutshell, Driver Inc is a misclassification scheme where employers mask employees as independent contractors," explains Marco Beghetto, vice president of communications with the Canadian Trucking Alliance. "These 'contractors' lack the autonomy and ownership typical of true independent contractors."
Beghetto says the workers don’t own their vehicles or have their own companies and are often new Canadians who may not fully understand Canadian employment laws. The misclassification tactic allows employers to avoid payroll taxes, WSIB or WCB payments, as well as paid sick days and other benefits.
Safety implications
One of the most pressing concerns raised by Beghetto is the safety implications of Driver Inc. Without proper classification as employees, truck drivers are deprived of essential protections such as coverage under workers' compensation boards. This leaves them vulnerable in case of workplace accidents, a significant risk given the nature of the trucking industry.
"Trucking tends to have a higher rate of workplace incidents, and these workers are left unprotected," Beghetto notes. He says there is a concerning correlation between Driver Inc companies and lower safety performance ratings, posing a risk not only to drivers but also to other road users.
It also creates an unfair competitive advantage. "It comes at the expense of the companies that have been playing the game properly by the rulebook all this time,” suggests Beghetto. “You sort of take out the responsible, safe, compliant trucking companies to grow the unscrupulous companies that are not playing by the rules."
Tax evasion
While Driver Inc may seem beneficial to workers due to apparent tax savings, Beghetto stresses that it ultimately results in significant tax evasion. By misclassifying employees, companies evade payroll taxes and deprive the government of crucial revenue and workers may choose to not pay their own individual income taxes.
"The government loses out on legitimate revenue that could support critical infrastructure and social programs," Beghetto points out, suggesting more than a billion dollars in tax revenue is lost per year related to this employment misclassification scheme.
The Canadian Trucking Alliance issued a press release ahead of the 2024 Federal Budget, which will be unveiled next week, urging the federal government to clamp down on the practice.
"We need the government to take action immediately," Beghetto urges. "Failure to address this issue not only jeopardizes worker safety but also undermines the integrity of Canada's tax system."
Action from supply chain stakeholders
But it’s not just up to government to help curb this problem. With safety, tax, and labour rights at stake, it's imperative for stakeholders across the supply chain to heed Beghetto's message and advocate for meaningful reforms.
"The wider supply chain needs to know who its service providers are and ensure compliance with labour laws and tax regulations," he urges. "It's time to put an end to Driver Inc and uphold the principles of fairness and accountability in our industry."
As the trucking industry navigates these complex issues, one thing remains clear: addressing the challenges posed by Driver Inc requires concerted effort and decisive action from all stakeholders involved.
