The Canadian government is taking steps to crack down on a worker misclassification scheme impacting the country’s transportation industry.
On Dec. 1, Employment and Social Development Canada announced an inspection blitz would be held in Hamilton and the Greater Toronto Area in the “coming weeks.” Officials said the focus would be to identify non-compliance with federal labor standards.
“Canada’s trucking industry is built by devoted workers who keep our communities and economy moving. Misclassification is not only exploitation, but also illegal – plain and simple,” said Patty Hajdu, Minister of Jobs and Families. “This inspection blitz is about finding employers who are breaking the law and holding them accountable so every truck driver in Canada is treated fairly.”
The misclassification scheme – known as the Driver Inc. model – 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 them through their new corporation.
Because the company is paying another corporation, it is not producing a regular paycheck, so the payments are not subject to tax deductions. Because of this, the company also doesn’t pay into social programs or workers’ compensation funds, significantly affecting protections and government programs typically reserved for employees, not incorporated entities.
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