Canada creates ‘dedicated national team’ to address worker misclassification

The Canadian government is stepping in to address worker misclassification issues within the transportation industry.

This week, Employment and Social Development Canada announced a campaign aimed at addressing the issues of worker misclassification through the use of a mobile enforcement unit. According to ESDC, over the past six months, the unit has completed “over 300 inspections and outreach sessions.”

Established by the Labour Program, the formation of the “dedicated national team” comes in response to concerns from those within the industry. Among those concerned is the Canadian Trucking Alliance, which has said the federal government has “fallen short” when it comes to tackling the issue of Driver Inc. – a tax scheme that the alliance deems “a misleading business practice which denies employees access to important rights and entitlements under the Canada Labour Code.”

“Driver Inc. is a scourge on our sector, and it continues to rob those who play by the rules,” CTA President Stephen Laskowski said in a statement. “This new enforcement unit must ensure that every driver being abused of their labour rights is paid in full, and these gross violating carriers receive zero leniency. The laws have always been clear and they must be enforced through monetary penalties and other forms of punishment.”

The alliance claims the worker misclassification scheme costs drivers “important labour rights, protections and entitlements as traditional employees – including overtime pay, general holidays, annual vacation and several protected leaves like medical leave with pay.”

This past November, the federal government responded by providing ESDC $26.3 million over five years, starting in 2023-24, to “take stronger action against noncompliant employers through orders, fines and prosecutions to enforce the Canada Labour Code.”

“The Labour Program has intensified its efforts to eradicate the illegal practice of employee misclassification,” ESDC said in a recent memo sent to industry stakeholders. “Through enhanced education, as well as proactive and targeted inspections across Canada, the Labour Program is actively working at ensuring that employers understand and fulfill their obligations under the Code.”

According to ESDC, companies found to be noncompliant with the Labour Code face “a spectrum of enforcement measures,” including maximum fines of up to $250,000 CAD. The agency said that over the past six months, it has issued payment orders totaling over $600,000 to companies in the road transportation sector – 80% of all payment orders issued over that span.

In its memo, the agency said it is “strongly committed to addressing the illegal practice of employee misclassification” and would continue to “expand the pace and scope of its efforts” when it comes to addressing the issue across Canada. LL