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Truck driver services offer steady work — when above board

Posted: January 15, 2019 by Jim Park

Employment with a driver service can offer flexibility and steady work.

TORONTO, Ont. — There is a whole subset of truck drivers who don’t work directly for a fleet, but enjoy steady work with flexible hours and generally a little more freedom. Still others are hooked up with prime companies that offer top pay and great benefits, but collect their pay stubs from a third party.

They fall under the umbrella of driver services — the companies that place drivers on temporary or permanent assignments with for-hire and private carriers alike.

Defining exactly how a driver service operates can be a bit confusing because each business comes with a slightly different mandate. Many serve as temporary staffing services for transportation and logistics companies that need drivers on a short-term basis, maybe to supplement the labor force during peak periods, or to fill seats during short-term contracts and vacations. Their efforts are not limited to drivers, either. Some services also supply material handlers, dispatchers, mechanics, and others. The assignments themselves can range from a day or two to several months, or even full-time positions depending on the needs of the companies involved. And sometimes temporary assignments can lead to full-time positions with a fleet.

Other driver services operate as extensions of the carrier or company requiring drivers. In effect, these companies may function as a carrier’s human resources, safety and compliance, dispatch, and training departments. It’s outsourced human resources. For example, a driver would work for ABC Staffing but would drive trucks belonging to Company X. In many cases, all of Company X’s transportation and logistics needs would be provided by ABC Staffing — including drivers, dispatchers, payroll, and the safety department. Responsibilities for screening and hiring drivers, ongoing training, safety, and compliance would all fall to ABC Staffing, along with the payroll responsibilities, vacation pay, and tax deductions at source. Company X would pay ABC Staffing for the service on a cost-plus basis. Drivers would get their cheques and benefits from ABC Staffing even though they might wear a uniform bearing Company X colors.

“We replace the personnel department, the payroll department, and the safety department,” says John Harrison, director of transportation operations for CPC Canada, a company that specializes in sourcing drivers and other logistics personnel for major private carriers. “We’re really a lot more than simply a company set up to supply drivers to a carrier.”

Harrison says CPC Canada is virtually unknown in the industry because all its drivers are driving its client’s equipment. With over 3,300 drivers across North America, they are a significant player, but few drivers have ever heard of the company. While that poses some recruiting problems, Harrison says most of his new hires come from driver referrals.

“We have a really aggressive driver referral program,” he says. “We face the same [recruiting] challenges as most other companies, but we are looking for experienced and ready-to-place drivers. That makes it a little tougher, but the referrals help a lot because drivers talk.”

CPC provides drivers and other personnel to some high-profile private carriers, so the jobs can be ranked as desirable. The runs are steady and the routes are predictable — and so is the scheduling and time off. You’d think that would set them apart from the for-hire crowd, but CPC still has to work to find drivers. Harrison says just a couple of years ago he had a waiting list of drivers wanting a placement through CPC. “Not anymore,” he says. “We are trying to find good drivers just like everyone else is, but we have very high standards. A lot of people pass through the doors, but not many qualify.”

While CPC focuses on placing drivers into permanent full-time positions with established private carriers, other companies like Kee Human Resources focus on providing drivers and other personnel mostly for-hire carriers and other industries.

Beyond a temp agency

“We do not consider ourselves to be a driver service or a temp agency,” says company president and CEO Kieran O’Briain. “We are more of a human resources management company, specializing in finding suitable and drivers mainly for the for-hire sector of the trucking industry. We start with the recruiting process, then we screen and road test the applicant. And if everything works out, we hire them for eventual placement with one of our carrier clients, but they remain our employee.”

Kee does maintain a small pool of drivers available on short notice, to fill gaps with his regular clients, but that’s usually the drivers’ choice. “There are people who do not want to work full time or to be tied to a certain carrier,” he says.

The advantage for drivers working for companies like Kee HR are a slightly more flexible work environment and probably a benefit plan, which is not always offered by for-hire carriers.

Kee’s client base includes several large fleets, and drivers can choose (depending on availability) where they’d like to work. If after a time the driver or carrier finds things are not working out, the driver can be reassigned without quitting and beginning the job search all over again.

“The wages we pay to the driver are exactly the same as the carrier’s own employee drivers make,” he says. “It’s not like they are second-rate drivers or fill-ins. If there are differences with the internal pay scale — such as running Canada-only compared to running to New York City — our pay rates reflect that, too.”

A question that often arises is how to the driver services make any money. “Cost-plus,” says O’Briain. “We are taking on the challenge of recruiting, screening, and testing the applicants, so we are reducing the carrier’s hiring costs. Our share of the withholding tax, CPP, WSIB and the like is pretty transparent. So the carrier pays all that, as they would with their own employee and we mark up all our services appropriately.”

While drivers working for a staffing company are unlikely to be paid more than native drivers, they are equally unlikely to be paid less. So what’s the advantage to working for an agency rather than directly for a carrier? Probably flexibility.

“We face all the same recruiting challenges that any employer faces today, so we have to distinguish ourselves in the market and offer something different, something drivers really want,” says Tracy Clayson, director of client development at In Transit Personnel, owned by CPC Logistics with Quality Driver Solutions. It offers temporary, permanent, and contract positions for city, local and regional drivers as well as forklift operators and administrative staff. “We have a very diverse client list, so drivers who choose to work here have a lot of options.”

She says In Transit has some clients that are open to helping drivers develop new skillsets and move into different lines of work, such as roll-off or disposal and even tanker assignments, but she’d like to take it even further. “I’d like to be able to do more in terms of helping entry-level drivers gain some experience,” she says. “I’m trying to encourage others within our group to set aside their fear of the risk associated with hiring entry-level drivers and establish a controlled finishing school where we have coaches to help these drivers develop their critical on-road skills.”

The stain of Driver Inc.

Working for a driver service can be a pretty good for a driver, provided it’s all above-board. Unfortunately for the legitimate operators, there’s a breed of competitor that doesn’t play entirely by the rules. Known colloquially as Driver Inc., these companies pay drivers under the table and don’t fully inform them of tax and other legal obligations. The rates of pay vary, but they often initially appear to be greater than the prevailing rates because they include “the cost of employment” or the employer’s share of the tax burden.

It puts legitimate companies at a recruiting disadvantage while leaving workers with unexpected tax liabilities.

Some say the problem lies with drivers who come from other countries where regard for employee compliance, paying taxes, and fair competition may not be as firmly ingrained as it is in Canada. Other blame carriers and unscrupulous driver services for exploiting these drivers and taking advantage of a tax loophole.

“I compete with companies using the Driver Inc. model, and that gives them an unfair advantage,” says Clayson. “I pay my taxes and I pay my employees fairly and competitively, but I’m seen as more expensive in the market than those other operators because I’m following the rules.”

The Driver Inc. business model isn’t technically illegal, although it falls into very shadowy territory. The use of contractors for certain types of work is not uncommon, but rules applying to the use of contractors in transportation have a “means” test that usually includes owning some of the equipment necessary to perform the job. In other words, a truck. Sole-source driver services were recently classified by Canada Revenue Agency (CRA) as Personal Service Businesses, or PSBs, which leaves them without the ability to deduct most of their “business” expenses, while removing most of the protections and benefits offered to traditional employees, such as WSIB, vacation and statutory holiday pay, and protection from unfair termination.

“A lot more people are doing this than you might think,” says O’Briain. “CRA hasn’t actually said no to this practice, but they do want see the T4As filed for every driver you pay as a contractor. The big problem is that most of these arrangements are completely under the table, like [a] cash job by the guy who seals your driveway for a hundred bucks with no receipt.”

Ironically, the big loser in all this is the driver — the one most needed to make trucking work. Certain companies are playing fast a lose with the rules, offering what at first appears to be a pretty good deal to the unsuspecting driver. That driver might not realize his or her mistake until sometime down the road when they get that call from CRA, which will probably sour another driver on the trucking industry.

“It’s short-term gain with long-term pain,” says Clayson.

 

 

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