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- Business
- Winnipeg Free Press
Staff-reporting subterfuge still rife in trucking, say advocates
It's one of the worst-kept secrets of the road — some trucking firms under-report payrolls to gain a financial and competitive advantage.
By refusing to label workers as employees, companies avoid a host of costs — employment insurance, pension contributions, payroll taxes and worker compensation premiums.
National and provincial trucking associations have been flagging the scheme — called Driver Inc. — for years, saying it's one more example of the regulatory challenges facing the industry.
Tim Smith/The Brandon Sun Files
Trucking companies caught under-reporting payrolls to the WCB, only face a maximum penalty of $5,000.
'(Under-reporting to the Workers Compensation Board of Manitoba) speaks to the planned non-compliance that we're seeing as a theme in our industry,' said Aaron Dolyniuk, executive director of the Manitoba Trucking Association.
And the penalty doesn't quite fit the crime.
Companies caught under-reporting payrolls, often to the tune of millions of dollars, to the WCB, only face a maximum penalty of $5,000.
Last year, the WCB audited 77 trucking companies, 13 of which were found to have under-reported their payrolls. The Free Press filed freedom of information requests on two firms to gain a better understanding of the issue.
4Tracks, a Rosser-based company, was fined for under-reporting its 2021 and 2022 payrolls following last summer's audit.
In 2022, 4Tracks under-reported wages by $4.3 million, according to the WCB assessment. In 2021, the shortfall was $2.97 million — $1.06 million in under-reported T4 wages, and the remainder from under-reported contract labour.
'Every service provider who receives a T4 from the firm falls under the definition of a worker,' the documents read. 'Therefore, all T4 earnings of the firm's workers, who reside in Manitoba, should be included in assessable payroll.'
The company was made to pay additional premiums of $109,810 and a $5,000 administrative penalty for the 2022 infraction; and additional premiums of $68,806 and another $5,000 penalty for 2021.
Meanwhile, Canadian Hub Trucklines under-reported its payroll by $1.12 million in 2022, according to the WCB audit. The Winnipeg-based firm under-reported T4 labour by $215,673, the document says, while the remainder was a result of under-reported contract labour.
The company faced additional premiums of $27,511 and was fined a total of $4,126, the WCB report states. Canadian Hub is fighting the audit's findings.
'If you got a ticket … someone gave you a fine, doesn't mean that you were proven guilty,' said Gary Singh, the company's manager. 'You have all the rights to go and fight. That's what we're doing.'
The WCB wouldn't say whether it was re-investigating the case.
In 4Tracks's case, the company's general manager said in a statement its under-reporting was 'unintentional and made in good faith based on our understanding at the time,' as it wasn't aware T4A slips for subcontractors needed to be included in payroll reporting.
Once 4Tracks became aware of its error, it requested a meeting with the WCB to better understand reporting requirements and to correct oversights, PJ Singh said in the statement.
'Since then, 4Tracks has changed its practices to ensure that all payroll information reported to WCB is in compliance,' Singh wrote. 'And to our knowledge, we have not been in default.'
Although WCB payments aren't the largest worker-related expense, the penalty for non-compliance is too low, Dolyniuk said.
'It's not even a rounding error for some of the companies,' he said.
The province said it will examine WCB penalty rates as part of its next review of The Workers Compensation Act.
The WCB didn't provide a total amount of under-reported payroll from trucking companies in 2024, saying it couldn't meet deadline because of the large data pull, however the cumulative administrative penalty last year was $65,582, and total adjusted premiums amounted to $565,104.
Non-compliance often is an indication drivers aren't being paid fairly, Dolyniuk said.
Tracey France, who has been trucking for more than two decades, has been encountering more underpaid drivers in recent years.
'Half these companies are taking advantage by not paying (staff),' France said outside a Headingley truck stop. 'That's wrong.'
Exploitation can arise when employees are tied to temporary foreign work permits, said Diwa Marcelino, a community organizer with Migrante Manitoba.
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'There's a disconnect between companies who are offenders, and they still have the privilege of being in business,' Marcelino said. 'To me, that's unacceptable.'
Driver Inc. is a nationwide concern. The Canadian Trucking Alliance has raised its voice against the scheme in recent years, joining provincial trucking associations, such as the Alberta Motor Transport Association.
'A segment of the trucking industry is participating in, we believe, an illegal scheme to enrich those companies,' president Robert Harper said.
In Manitoba, the provincial government has formed a working group with stakeholders to tackle exploitation within the trucking industry.
Gabrielle PichéReporter
Gabrielle Piché reports on business for the Free Press. She interned at the Free Press and worked for its sister outlet, Canstar Community News, before entering the business beat in 2021. Read more about Gabrielle.
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