Multiple Canadian trucking groups are claiming an employee misclassification scam is costing the government billions in lost taxes – and is putting the trucking industry into a state of crisis.
On May 16, representatives from Teamsters Canada, the Canadian Trucking Alliance and the Quebec Trucking Association held a joint news conference to “sound the alarm” regarding the tax scheme known as “Driver Inc.,” asking for urgent federal action to end the practice within the industry.
“Successive governments have failed to address the issue, allowing the problem to fester over decades and become a crisis,” the groups said in a joint statement.
According to the Alliance, Driver Inc. is a tax and employee misclassification scam in which a trucking company has its employees register as a corporation. Rather than giving their employees a paycheck, the company will pay the employees’ new corporation. Because the company is paying another corporation, they are not producing a normal paycheck, meaning the payments are free from tax deductions. Because of this, the company also doesn’t pay into social programs or workers’ compensation funds – significantly affecting the protections and government programs typically reserved for employees and not-incorporated entities.
Left unchecked, the prevalence of the use of Driver Inc. in the Canadian trucking industry is growing. According to Stephen Laskowski, CTA President, the use of the Driver Inc. model by carriers in the long-haul sector has increased 17% from 2018 to 2021.
“There is a crisis in our industry,” Laskowski said. “A crisis of labor abuse funded by a tax scheme.”
If the erosion of the trucking industry within the country doesn’t make the Canadian government take note, perhaps the loss of revenue will. Marc Cadieux, president and CEO of the Quebec Trucking Association, claims that Driver Inc. is costing governments at least $1 billion annually.
“That’s money that should be going to build our infrastructure and securing our social safety net, but instead is going into the pockets of crooked businesspeople,” Cadieux said in a statement, “It has to stop!”
François Laporte, President of Teamsters Canada, said the practice was “detrimental to the industry” and urged officials at all levels of government to help remedy the situation.
“We request an immediate intervention from the various departments of all the jurisdictions across Canada,” Laporte said. “Not just Canadian government, but also the provincial government, because they also have a responsibility and we hope that they will hear our message today.”
In January 2021, amendments to the Labour Code went into effect making the intentional misclassification of employees illegal. However, that hasn’t curbed the number of carriers operating under the practice. According to Employment and Social Development Canada, a recent pilot enforcement project to educate transportation employers about the new rules found more than 60% of drivers to be in violation of the misclassification rules.
Scott Tilley, president of Tandet Group, an Oakville, Ontario-based trucking company, echoed Laskowski’s sentiment, adding they simply want the government to enforce those rules as soon as possible.
“Make no mistake, this is at a crisis stage,” Tilley said. “Either the rotten, smelly tactics of Driver Inc. get called out and stopped, or the problem of labor abuse wins and the crisis becomes more rampant.”
The collective fight against Driver Inc. has been going on for over five years. In 2018, then-Federal Minister of Employment, Workforce Development and Labour Patty Hajdu introduced a bill to address the tax scheme. Since then, the alliance claims the Canadian government has “fallen short” of its commitment to end the nefarious practice.
This past October, The CTA launched a social media and public relations campaign aimed at raising awareness about the tax and labor scheme. The alliance said the campaign was, their “largest push to date” in the fight against Driver Inc.
Less than a month later, the government of Canada released its 2022 Fall Economic Statement. Included in the statement was a section regarding protecting the rights of road transportation workers, specifically targeting companies that use the Driver Inc. model.
To combat the issue, the Canadian government proposed providing ESDC with $26.3 million over five years, starting in 2023-24, to, “take stronger action against noncompliant employers through orders, fines and prosecutions to enforce the Canada Labour Code.”
“This will improve working conditions for thousands of gig workers, newcomers, and racialized Canadians while creating fairer, safer workplaces for everyone by ensuring that federally regulated transportation employers are not illegally misclassifying their drivers,” the statement read.
During Tuesday’s press conference, Laskowski called the investment a “good start”, but noted the groups are still waiting to hear whether or not that funding was approved. LL
Credit: Source link
