TORONTO, Ont. – The Ontario Trucking Association is taking its fight against the “Driver Inc.” employment model to shippers – identifying the potential risks of working with such fleets.
Driver Inc. refers to fleets that mis-classify employees as independent contractors in a bid to avoid paying source deductions for things like Employment Insurance and the Canada Pension Plan.
For its part, the association has developed a new tip sheet to help identify fleets that are operating under the employment scheme.
“Every member in the supply chain needs to understand how this practice is non-compliant from both a tax and labor perspective,” said Stephen Laskowski, association president.
Those who do business with the Driver Inc. fleets are putting themselves in a “precarious position” if the Canada Revenue Agency cracks down on a carrier and drivers, or if a driver is injured on the job, the tip sheet says.
In helping shippers identify Driver Inc. carriers, the tip sheet stresses that true owner-operators own or lease their trucks, while incorporated drivers don’t have a financial stake in the tools of the trade. If the drivers servicing a business are not true owner-operators, it’s recommended that those in the supply chain ask if the carriers are remitting income tax on behalf of employees, and paying the employer portion of Canada Pension Plan and Employment Insurance.
Job postings offer information as well. The pay packages designed for a Driver Inc. business model might reference that employers pay “plus HST” or “pay to corporations”, the OTA observes.
“It is also not unusual for Driver Inc. companies to register a very small percentage of their drivers in order to produce a clearance certificate,” the tip sheet says. “To limit your liability exposure, it is good practice to ensure your carriers have coverage for all of their workers.”
Shippers should also be encouraged to ask carriers if they’ve ever had a WSIB audit, if they can provide a WSIB certificate, and how much they paid in related premiums last year, it adds. The tip sheet also recommends asking carriers about their total T4 payroll expenses, proof of Employer Health Tax remittances, and CVORs operated by the business.
The OTA estimates that the Driver Inc. business model costs the federal government more than $1 billion in tax revenue per year.