Feds know of 40 Driver Inc. fleets, penalties coming

The federal government is aware of at least 40 businesses that are misclassifying employed truck drivers as independent contractors in a business model known as Driver Inc. Employment and Social Development Canada (ESDC) plans to apply Administrative Monetary Penalties (AMPs) in the new year, using new legislative powers that include the fines and the ability to publicly name employers that don’t comply with the rules.

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Work in 2021 has so far focused on education and awareness, said occupational health and safety officer Elizabeth Tavares, during an update for the annual meeting of Ontario’s Fleet Safety Council. But there has also been a key shift in enforcement practices, which have typically responded to complaints from misclassified employees.

“We’re doing proactive – which means that we’re identifying companies we’re aware are using or misusing the Driver Inc. model,” she said. “At this point in time we’re not taking any enforcement action, but we will be taking enforcement action in the new year,” Tavares said. “We will be doing investigations or inspections at their site.” A four-point test to see if someone is legitimately contracted for service includes control over work, the ownership of tools, the chance of profit, and the risk of loss.

Other signs of misclassified employees include the presence of company uniforms, decals on tractors, and whether drivers have to follow company policies and procedures. “We’re not just talking about the ownership of the tractor,” Tavares said, noting the regulators are looking at licensing authorities, Ontario Commercial Vehicle Operator’s Registrations (CVORs) and insurance, rather than simply a lease-to-own agreement on the truck. If the fleet is providing the licensing and authority to perform the work, it’s seen as an employer-employee relationship – especially if drivers are working exclusively for the fleet.

“The right to exercise control is very important,” Tavares said. Perhaps the “biggest component” is whether the driver can be hired for multiple jobs rather than a single company. “We’re not saying there are not legitimate owner-operators out there,” she said.

If ESDC finds that an employer is treating a worker like an employee just to avoid obligations under the Canada Labor Code, however, the employer faces the “burden of proof” to prove they’re right. Federal labor standards cover things such as hours of work, vacation pay, holiday pay, sick leave, and protections against unjust dismissal. Yet some drivers clearly prefer the business model, which sees pay delivered without source deductions.

ESDC personnel are “getting a lot of pushback” from employers and employees alike, she said. “Working under the table is risky.” It isn’t the only regulator looking to crack down on such operations.

Ontario’s Workplace Safety and Insurance Board (WSIB) has set up an online portal to report Driver Inc. fleets. “It’s good to hear we’re going to get some enforcement finally,” said John Farquhar, risk solutions specialist at Summit Risk Solutions. “I think you’re about to open up one hell of a can of worms here.” One of the challenges is that many insurance companies will not cover single owner-operators, he added.

“This is really going to cause some grief in the industry.”