The trucking sector is currently under scrutiny on Parliament Hill because of mounting concerns about wage theft, safety lapses and employee misclassification.Keito Newman/The Globe and Mail
Trucking regulators must ramp up safety, labour and tax audits to reverse deteriorating working conditions and curb a significant rise in companies illegally classifying workers as self-employed, business leaders and labour groups say.
The trucking sector is currently under scrutiny on Parliament Hill because of mounting concerns about wage theft, safety lapses and employee misclassification – through which companies wrongly classify drivers as self-employed, thus stripping them of basic labour protections, and allowing employers to evade mandatory contributions to government pension and employment insurance plans.
A Globe and Mail investigation published Saturday found that disjointed regulation in the trucking industry has allowed the practice to flourish. Census data requested by The Globe from Statistics Canada show the sector has seen a significant rise in self-employed workers with no paid help, which means their business engages no other employees. It’s a precarious form of work that experts believe can indicate misclassification. In some regions, the increase to the number of drivers in this category over a decade was more than 300 per cent.
The House of Commons transport committee is currently studying what it calls the trucking sector’s “changing landscape.” Hearings have focused largely on the misclassification issue, which critics argue is now endemic in trucking.
Existing research links low wages and job uncertainty to poor road-safety outcomes. But while provincial transport regulators have the ability to conduct in-depth inspections of trucking firms’ safety records, a Globe analysis of 7,000 trucking firms in four provinces found 85 per cent of those companies have never received such an audit.
The lack of safety audits in the sector “absolutely concerns me,” Steve Ondejko, the president of Onfreight Logistics of Tecumseh, Ont., said in an interview.
“The driver is being abused. The safety of the roadway and the safety of the public is being abused.”
Lise Vaugeois, NDP MPP for the Northern Ontario riding of Thunder Bay–Superior North, said trucking firms need to be inspected in person to ensure compliance – with better information-sharing between provincial authorities responsible for enforcing road safety rules, and federal regulators tasked with upholding workplace standards in cross-country trucking.
“Nobody ever looks at the books, nobody talks to the drivers, nobody looks at the shape of their equipment,” she said.
“You have people under pressure who are not making a living wage. And then you have the provincial government that has completely failed at enforcing existing laws.”
Long-haul trucking is the largest source of workplace complaints in federally regulated industries, The Globe’s investigation found. However, Ottawa has penalized just a handful of employers and collected less than 20 per cent of the millions of dollars of unpaid wages it has ordered trucking firms to pay drivers, the investigation found.
“We need more fines. We need more inspections,” said Christopher Monette, director of public affairs for Teamsters Canada, a union representing transportation workers including in the trucking sector.
Mr. Monette said the penalties issued to firms that have broken the law are currently a “fraction compared to what these bad actors are actually saving by skirting all of our labour and safety rules.”
The Globe’s investigation found workers filing complaints over workplace violations sometimes wait more than a year just to be assigned a case officer, prompting criticism that companies can shut down to evade scrutiny.
“If someone simply closes down their shop and reopens in another area, regulators are already so many steps behind,” said Dan Albas, MP for Okanagan Lake West—South Kelowna and a vice-chair of the House of Commons transport committee.
“If they’re going to break rules in one area, they’re going to break the rules in many areas, particularly if they know that there’s little to no enforcement.”
Over the course of months of hearings before the committee, trucking firms from across the country have pleaded with regulators to take action – arguing that the illegal cost savings generated by misclassifying drivers is creating an unfair playing field.
“The customer loves it because he gets a cheap rate,” said Mr. Ondejko, who is also a previous chairman of the Ontario Trucking Association (OTA).
“Well, I think that party should be over.”
Ottawa has already taken multiple steps to tackle misclassification, including changing labour laws to explicitly ban the practice as of 2021, and creating a specialized unit at Employment and Social Development Canada (ESDC) to root it out.
Last fall, the federal government also committed $77-million for the Canada Revenue Agency to increase scrutiny of trucking firms’ payments to contractors – lifting a previous moratorium on penalizing failure to report these transactions.
Trucks line up for the Oakville North Inspection Station in Oakville, Ont., in May.Keito Newman/The Globe and Mail
The OTA has said the moratorium weakened oversight of the trucking sector and accelerated the “predatory use” of the misclassification model.
Mr. Ondejko said he’s noticed a shift in driver applicants to his company in recent months: Whereas some previously believed they would earn more money as an independent contractor, many are now aware of the rules around misclassification – and the longer-term benefits they lose because of false self-employment, such as sick leave and pensions.
However, Mr. Ondejko said the CRA still needs to devote more resources to tax enforcement given the scale of employee misclassification.
“I guarantee it’s in other industries too,” he said, adding that the country is losing “lawful tax dollars that they should be collecting, so that they can build hospitals, roads, sewers.”
This April, Ottawa launched consultations on ramping up penalties for labour violations, and federal and provincial labour ministers agreed to create a working group to develop a joint plan on addressing misclassification in the trucking industry.
However, trucking regulation remains highly fragmented, prompting concerns that information gaps are undermining enforcement efforts.
Most provincial transport regulators do not have formal information-sharing agreements with ESDC’s labour program, The Globe’s investigation found – although ESDC and the CRA recently signed information-sharing agreements to improve efforts to identify misclassification.
Mark Seymour, chief executive officer of Kriska Transportation Group, one of the country’s leading trucking firms, said he’d like to see stronger co-ordination between different levels of government.
“There’s an absence of harmonized effort across all of the agencies, not just CRA,” said Mr. Seymour, who also testified before the transport committee last October about the rise of employee misclassification.
“What’s been proven to us is if you have regulation with little to no enforcement, you end up with big problems – which is what we have today.”