“Driver Inc.” Scheme: Canada’s Trucking Industry Calls $1 Billion Scam a National Crisis
Canada’s trucking industry is intensifying its pleas to the federal government to halt what it describes as a widespread $1-billion annual scam known as “Driver Inc.” The Canadian Trucking Alliance (CTA), the national voice for the sector, is calling this illegal practice the biggest threat to the industry, even surpassing concerns about the ongoing Canada-U.S. trade war.
“Driver Inc.” occurs when trucking companies improperly classify drivers as independent contractors, often requiring them to incorporate, rather than treating them as employees. This allows companies to evade payroll taxes, including contributions to Employment Insurance (EI) and Canada Pension Plan (CPP), as well as workers’ compensation premiums.
Stephen Laskowski, President and CEO of the CTA, states that he believes “at least a third of the companies and the drivers are participating in this” in some parts of Canada. He argues the scheme “is hurting us twofold as a society” by diverting significant tax revenue from the economy and granting non-compliant companies an unfair competitive advantage, estimated at up to 30 percent.
Drivers under the “Driver Inc.” model are particularly vulnerable. They lose crucial labour protections such as fair pay, overtime, vacation pay, and health and safety benefits. Karanveer Singh, an international student who came to Canada in 2018, shared his experience of being misclassified by two companies, neither of which paid him. While he secured a Labour Board order, collecting the nearly $40,000 owed by one company remains unlikely. Singh highlighted how new immigrants are often targeted due to their desperation for work.
Despite government efforts, including making employee misclassification illegal for federally regulated employers in 2021 and strengthening this prohibition in 2024 (placing the burden of proof on employers), the CTA contends that enforcement remains insufficient. Laskowski has been lobbying the federal government for a decade on this issue, stating, “Nowhere near to the level that needs to be done.”
One key solution proposed by the CTA is lifting a moratorium on assessing penalties for companies failing to complete the “fees for service” box on the T4A tax slip. This measure aims to help the Canada Revenue Agency (CRA) identify and audit companies heavily reliant on incorporated drivers. However, Ottawa tax lawyer Dean Blachford cautions that this could overwhelm an already sluggish system with numerous disputes. The CRA has indicated it is working towards lifting the moratorium.
The “Driver Inc.” model is driving compliant businesses out of the market. Mark Seymour, owner of Kriska Transportation Group in Prescott, Ontario, expressed frustration: “It’s widely known, it’s not a dirty little secret. It’s out of control.” He emphasized that fair competition relies on all players adhering to the same ground rules, including paying appropriate taxes and treating workers as employees.
Beyond economic impact, safety concerns are also rising. Phil and Francie Langevin, owners of P.A. Langevin Transport in Carleton Place, Ontario, suspect that companies cutting financial corners with “Driver Inc.” also compromise safety standards. Singh’s personal account of being trained by an inexperienced driver who damaged a truck at a border crossing, and then being asked to train others without proper guidance, underscores these fears. “I think when these companies are allowed to operate, Canadians are not safe,” Singh asserted.
Employment and Social Development Canada (ESDC) stated it is taking action, having recently established an information-sharing agreement with the CRA for enforcement and compliance. A dedicated team of inspectors for the road transportation industry has conducted approximately 540 inspections and 320 education sessions across Canada since 2023.
Despite these efforts, the trucking industry continues to push for more robust and coordinated government action to curb the “Driver Inc.” scam, protect vulnerable workers, and ensure a level playing field for all businesses.