The $1B scam some say is driving Canada's trucking industry into crisis

Yahoo

12 hours ago

The national voice of the trucking industry in Canada is renewing calls for the federal government to pump the brakes on what it says is a $1-billion scam it calls "Driver Inc."
"We believe that in some parts of Canada at least a third of the companies and the drivers are participating in this, and it's hurting us twofold as a society," said Stephen Laskowski, president and CEO of the Canadian Trucking Alliance (CTA).
"Those are taxes that aren't going into our [economy], and on the flip side of it, it's about a 30 per cent advantage in the marketplace."
Laskowski described it as a tax evasion scheme where trucking companies purposely misclassify drivers as incorporated workers instead of employees to save money on payroll taxes. But he said those drivers also lose their labour rights including fair pay, overtime and vacation pay, as well as health and safety protections.
In 2021, the government made it illegal for federally regulated employers to misclassify employees, and added penalties for non-compliance.
In a statement to CBC, Employment and Social Development Canada (ESDC) said that prohibition was strengthened in 2024 by placing the burden on employers to prove a worker is not an employee.
However, Laskowski said more needs to be done, identifying Driver Inc. as the biggest current threat to the industry — including the ongoing Canada-U.S. trade war.
"We have worked and pleaded with governments to address it, and the reality is they are starting to, but nowhere near to the level that needs to be done. Nowhere near," he said.
Companies target newcomers
Driver Karanveer Singh agrees there's a lack of enforcement against companies that break the law.
Singh came to Canada from India's northern Punjab state as an international student when he was 18 years old.
"I'm trying to chase the Canadian dream," he said.
But Singh's journey took a detour shortly after he got his commercial trucking licence. He said the first two companies he worked for misclassified him as an incorporated driver, and also never paid him.
Singh was able to prove to the Canadian Labour Board that he had been misclassified and the companies were ordered to pay what he was owed.
While he was able to collect from one of the companies, Singh said it's unlikely he'll ever see the nearly $40,000 owed by the second company.
"Until the government enforces it, it is useless," he said, referring to the court order. "These companies, they know what they are doing…. Most of the time they will find new immigrants, new truck drivers to target because they are so easy to target because every new immigrant is desperate for a job."
A difficult problem
Part of the CTA's solution involves lifting a moratorium on assessing penalties for failing to complete the fees for service box of the T4A tax slip.
Laskowski said that would help the CRA identify and audit companies that rely heavily on incorporated drivers.
However, it could also further slow an already sluggish system, according to Ottawa tax lawyer Dean Blachford.
"With penalties comes disputes and penalty relief requests that clog up the system even if they are for small amounts," he explained in an email to CBC.
"Meanwhile, the companies that are pushing the limits the most with Driver's Inc. still might not comply with the T4A requirement and instead take further evasive means (such as using shell companies) to creditor proof themselves from having to pay the penalty if CRA ever identifies them."
In a statement to CBC, the CRA said it's working toward lifting the moratorium before enforcement commences.
It also said the agency is not aware of the analysis underlying Laskowski's claim that Driver Inc. has resulted in about $1 billion in lost tax revenue, and "therefore cannot comment."
Driving down business
The owner of Kriska Transportation Group in Prescott, Ont., is also urging the federal government to act, saying the Driver Inc. model is driving companies that do comply with tax regulations out of business.
The unfairness makes owner Mark Seymour's blood pressure rise.
"It's widely known, it's not a dirty little secret. It's out of control," he said.
Seymour has been in the business more than four decades, taking over Kriska from his late father in 1994.
"I have competed as many of us have for many years based on price and service where price should be established from the same ground rules as everyone," he said.
"That's paying appropriate taxes, treating people as employees and in the manner that the government would expect."
Ron and Francie Langevin own P.A. Langevin Transport in Carleton Place, Ont., and say they, too, worry about the future.
"There's so much wrong with this industry right now," Ron Langevin said, adding he suspects the companies that operate under the Driver Inc. model are so focused on profits that they also let safety standards slip.
"These issues are falling through the cracks, and the next time you're driving on a highway with a transport truck beside you I want you to look at it and I want you to wonder how safe am I, really," Francie Langevin said.
Singh said in his experience, that assessment is true. He recalled being trained by a very inexperienced driver who got them into trouble at the Port Huron border crossing.
"He hit the concrete wall over there at the border, and I was so surprised. Like, this is supposed to be my trainer and he just like damaged the truck," Singh said.
On his next trip, Singh said he was asked to be the trainer.
"They did not [tell] me a single thing and just gave me a new training driver for me to train," he said. "They want their stuff delivered, they want their job done.
"I think when these companies are allowed to operate, Canadians are not safe," he said.
ESDC said it is taking action, recently entering into an information-sharing agreement with the CRA to help with enforcement and compliance.
It also pointed to a dedicated team of inspectors focused exclusively on the road transportation industry across Canada. Since 2023, ESDC said the team has conducted about 540 inspections and held 320 education sessions across the country.