ESDC imposes fines totalling $600,000 over misclassification of employees, contractors
The federal government is buckling down when it comes to truck drivers and whether they are employees or independent contractors, particularly those involved with Driver Inc.
Employment and Social Development Canada (ESDC) has established a dedicated national team to enforce misclassification compliance in the trucking sector, reports news publication Land Line.
Over the past six months, the unit has completed “over 300 inspections and outreach sessions”, according to the report.
Through these inspections, ESDC has issued payment orders totalling over $600,000 to employers in the road transportation sector, noted the Canadian Trucking Alliance (CTA). This represents 80% of all payment orders the team has issued, said CTA.
The dedicated national team penalized employers for non-compliance with monetary penalties up to a maximum of $250,000, and includes escalating monetary penalties system and public naming.
CTA says the memo to industry from ESDC points out that misclassified workers miss out on important labour rights, protections, and entitlements as traditional employees – including overtime pay, general holidays, annual vacation, and several protected leaves like medical leave with pay – and that this practice can have serious consequences.
“Driver Inc. is a scourge on our sector and it continues to rob those who play by the rules,” said Stephen Laskowski, CTA president. “This new enforcement unit must ensure that every driver being abused of their labour rights is paid in full and these gross violating carriers receive zero leniency. The laws have always been clear and they must be enforced through monetary penalties and other forms of punishment.”
Ramped up enforcement around misclassification of workers
In November 2022, the federal government said it is investing $26.3 million over five years to address the practice of misclassification and protect the rights of road transportation workers.
“A lot of truckers aren’t getting the pensions or paid sick leave that they’re entitled to. So, we’re ramping up labour law enforcement to put a stop to that,” said Seamus O’Regan Jr., minister of labour, back then. “Workers should get the benefits they’ve earned.”
In December 2022, the Saskatchewan Trucking Association (STA) said Driver Inc. could push compliant companies out of business.
“There’s employees, we also have independent contractors which we call owner-operators, both have existed for many, many years, and are accepted in the industry,” said John Blackham, director of policy and public affairs with the Canadian Trucking Alliance, in the Global News report.
Driver Inc. is a rampant practice among federally regulated transport companies, said the STA back then, citing a survey that found 60% of these companies are using the employee misclassification scheme, allowing them to avoid paying more than $1 billion in taxes.