CTA: ESDC to expand enforcement efforts on Driver Inc. nationally, carriers to face compliance orders, payment orders to employees, administrative monetary penalties and prosecution for noncompliance

(TORONTO, Sept 7, 2022) – Today, the Labour Program at Employment and Social Development Canada (ESDC) released another statement on Driver Inc. misclassification. This follows statements made earlier this year by the Federal Minister of Labour, Seamus O’Regan, in the House of Commons condemning the Driver Inc. scheme. In today’s statement, the Labour Program once again reinforced its commitment to protect and strengthen federal labour standards by monitoring and addressing misclassification of employees in federally regulated industries, particularly in the road transportation sector.

The Incorporated Drivers Business model, known as Drivers Inc., is a practice whereby certain road transportation carriers establish working agreements that avoid or bypass labour laws, by treating drivers as independent contractors rather than employees. Misclassification prevents employees from accessing important protections and benefits (e.g., vacation pay, general holiday pay, overtime, and rights on termination of employment) under the Canada Labour Code (the Code). When misclassification occurs, employers may face enforcement measures and penalties.

ESDC is reminding carriers and drivers that as of January 2021, new measures were introduced under the labour standards provisions of the Code that prohibit an employer from treating employees as if they were not employees to deprive the worker of their rights under the Code. Employers who do not properly classify their employees may be subject to various enforcement measures, such as payment orders for any wages and other amounts owed to employees. Additionally, they may be found to have intentionally misclassified employees and be subject to further enforcement measures, such as compliance orders, administrative monetary penalties and prosecution.

This message comes on the heels of an ongoing enforcement pilot that was launched by ESDC to combat Driver Inc. in the Ontario Region. Today’s statement from ESDC notes that the results of this enforcement pilot have shown that “misclassification is wide-spread” and that the federal government has begun to increase enforcement measures when it comes to Driver Inc. ESDC also states that the Labour Program will be expanding its enforcement efforts nationally as part of a compliance strategy aimed at Driver Inc.

The Canadian Trucking Alliance (CTA) is reminding all carriers that the Driver Inc. scheme is considered purposeful misclassification under the Canada Labour Code and carriers involved will face enforcement action from the Government of Canada if they are found to be in noncompliance. Drivers working for Driver Inc. companies may also be eligible for back payment for entitlements under the Labour Code, such as vacation pay, general holiday pay, overtime and more.

To see the full message from ESDC, click here.

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