The trucking industry contributes significantly to the Canadian economy. In 2024, transportation accounted for 4.3 per cent of gross domestic product (GDP), with 46 per cent of goods moved by trucks.
However, despite the fact that truckers make up only 17 per cent of all federally regulated employment, the industry accounted for 85 per cent of violations of the Canada Labour Code in 2022. These include unpaid wages, illegal deductions and wrongful terminations.
The prevalence of the “Driver Inc.” (independent contractor) model, combined with an inadequate enforcement of federal labour standards, is what enables the systemic exploitation of drivers and the continued deterioration of their working conditions.
Our ongoing research, which is not yet published, explores how ineffective regulatory measures and illicit business practices contribute to precarious employment.
The federal government should act in four key areas to protect drivers: enact labour-code amendments to ensure better working conditions; institute a three-part test to determine whether drivers are employees or contractors; allow more time for drivers to file claims when they feel mistreated; and insist on a more vigorous approach by the Canada Revenue Agency (CRA) when companies close then reopen under a new name to avoid legal obligations.
What is Driver Inc.?
Deregulation reshaped the industry’s operations and continues to influence labour practices today. The Motor Vehicle Transport Act of 1987 loosened market entry, ended rate regulation and removed licence restrictions. It was intended to stimulate competition, increase productivity and reduce costs for shippers.
However, our research shows deregulation also produced lasting negative effects. It created a race-to-the-bottom dynamic that encouraged severe cost-cutting and widespread labour-code violations. A rise in subcontracting further fragmented the industry, introducing multiple layers between workers and employers that complicate the enforcement of employment standards.
Within this context, Driver Inc. emerged as a controversial business model where truck drivers are classified as incorporated contractors rather than employees, allowing the carriers to reduce tax and insurance liabilities.
This shifted significant risks and costs onto the truckers, depriving them of core employment protections such as fair wages, overtime pay, vacation entitlement, and workplace health-and-safety standards.
Some drivers report receiving Canada Labour Relations Board decisions allowing them to recover unpaid wages, only to find that their former employers dissolved the company and reopened under a new name to avoid compliance.
While some drivers view incorporation as a way to save money, the trade-offs are substantial. They lose access to employment insurance, the Canada Pension Plan, workplace-injury compensation and safeguards against wage theft.
Companies often promise truck drivers more revenue if they incorporate, presenting it as an opportunity to boost their income.
However, the trade-offs are more costly because employment benefits represent approximately 30 per cent of a driver’s compensation as an employee. Thus, many drivers who incorporate ultimately earn less overall while also assuming financial and legal risks.
To address these problems, the federal government should consider four approaches that confront the regulatory loopholes and enforcement failures that have created this situation.
Better working conditions
Irregular schedules, long hours and poor remuneration often impact the physical and mental well-being of drivers. Part III of the labour code narrowly covers working hours, rest and overtime pay but does not address several key problems.
Many drivers we interviewed complained about unpaid waiting time and non-driving tasks. Some said they are often paid based on the shortest route between points, not the actual miles driven. Also, there are many reports of companies lowering per-mile pay rates in recent years.
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The labour code should be amended to establish a minimum per-mile rate adjusted to inflation and fuel prices, as well as a standard hourly wage for non-driving tasks such as loading, unloading and vehicle inspections.
An ABC test
Workers should be considered employees unless the employer can demonstrate that (a) the worker is free from the company’s control under the terms of a contract; (b) the work performed is outside the company’s usual course of business; and (c) the worker is engaged in an independent trade, occupation or business of the same nature.
This would ensure that the employer is held accountable for job misclassification and allow the employees to benefit from protections such as the wage-earner protection program.
Increase the time limit for claims
The labour code gives workers only six months from the last day on which the employer was required to pay wages to file a monetary complaint. This is unreasonably short given the financial strain and job insecurity these workers often face.
Extending the time limit to two years would provide workers with a fair opportunity to recover from hardship and gather the necessary documentation to hold bad employers accountable.
CRA inspections upon company closure
The CRA should conduct mandatory inspections and tax audits when a company closes to identify cases where it misclassified its workers and/or evaded taxes, then hold it accountable before it is allowed to resume operations under a new name.
These recommendations come at a critical moment for the trucking industry and federal labour regulations. Enhancing regulatory measures and ensuring fair compensation are essential for protecting workers and for fostering a sustainable and equitable trucking industry.
The research project referenced in this article is funded by CFREF Migrant Integration in the Mid-21st Century: Bridging Divides and the Institute for Research on Migration and Society.
