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Out of The Shadows: The Rise of ‘Zero-Employee’ Trucking

The Canadian Trucking Alliance has spent the last half decade pressing the federal government and its provincial counterparts to put an end to the blatant labour abuse and tax avoidance scheme known as Driver Inc. During that time, despite the best efforts of CTA and other stakeholders, the model continues to flourish. The problem is so pervasive that it led the Toronto Star to publish an expose in December 2021, which connected the dots between the “billion-dollar scam … known as Driver Inc” and rampant tax avoidance, labour abuse and “shoddy” safety practices by unscrupulous carriers. Meanwhile, the industry continues to wait for the serious level of enforcement this problem deserves.

The solution to this problem is not education. It’s significant and widespread hard enforcement. The Minister of Labour recently issued a statement in the House condemning the Driver Inc. model. CTA applauds the minister for his recognition of the problem, but after more than five years of waiting for solutions, CTA needs to see real and impactful enforcement action on Driver Inc by the CRA and ESDC. This is the only acceptable response for such a flagrant abuse of the tax code and labour laws. And, with the incoming 10-paid-sick-day legislation – which will give unprincipled companies even more disincentive to comply with the rules – the need to curb Driver Inc. has never been greater. The integrity and competitive balance of the trucking industry, as well as the rights of Canadian transportation workers, is at stake.

While part of the evidence revealing the rapid growth of Driver Inc is driven by industry reports, data is starting to emerge from government sources. An analysis of Stats Canada Business Register data by CTA and its research partners shows the Driver Inc. trend is escalating rapidly throughout Canada. The data shows the growth of ‘zero-employee’ firms (registered corporations who claim no employees) in trucking grossly outpaced all other sectors of the economy between June 2018 and Dec. 2021. In fact, the average trend of zero-employee firms for all other industries stayed flat and even declined slightly – in stark contrast to trucking, where zero-employee firms have grown from 43,545 to 51,143 during that period. Ontario is home to almost half of all truck transportation establishments, with 47% of all such firms having no employees. In the largest trucking markets where known Driver Inc. carriers are most emergent (Toronto/Peel Region, Montreal, Vancouver, Calgary, Edmonton, and Winnipeg), zero-employee trucking firms skyrocketed by nearly 17 percent while there was a reduction of about -1% in all other industries during the same period. Leading the trend is Peel Region, which alone saw an increase of 3,914 zero-employee firms between 2018 and the end of 2021, accounting for 69 percent of the total increase in Canada. (A full copy of the CTA commissioned report can be obtained by clicking here: CTA-Zero-Employee-Driver-Inc_public.)

Upon reviewing the zero-employee trucking data and comparing it to other industries, one research partner asked CTA – incredulously and somewhat rhetorically: “What in the heck is happening in your sector?”

CTA is not claiming that all these trends in zero-employee companies can be solely explained by the explosive growth of Driver Inc. But, at the very least, it is undeniable there is a high degree of correlation considering the expansion is almost exclusively centred in the trucking sector and the highest increases are in geographic areas where the Driver Inc. scheme is known to be popular. Considering the severe lack of available new and pre-owned truck supply and the record-high cost of trucks, parts and fuel, it is increasingly more difficult for a traditional, legitimate owner-operator who pays for those things to enter the industry in this current economy – not easier, as the zero-employee business registrations would suggest.

It would not be outrageous to state that governments need to step in immediately, or else Driver Inc. will overtake the industry as the predominant business model, if it hasn’t already.

The solutions to end this scheme and restore order in the trucking industry are not complicated. To start, CTA has been calling on the Government of Canada to simply enforce our nation’s labour and tax laws already on the books. However, due to lack of widespread hard enforcement, established Driver Inc. carriers, as well as new operators looking to build their business model on the scheme, have been given a proverbial green light to proceed.

The Alliance wants to see immediate hard, zero tolerance enforcement of labour and tax laws related to Driver Inc violations; the development of tools to allow the industry to provide tips and evidence of noncompliance within the sector; and implement protections for new arrivals to Canada who want to make Canada their home and work in the trucking industry.

Especially considering the introduction of the 10-paid-sick day policy later this year, CTA and its members truly believe we are running out of time to save the trucking industry – the most critical service provider to the supply chain and the Canadian economy – from being taken over by the underground economy.

Consequently, CTA is urging a full-frontal response by industry. An industry call to action designed to highlight some of the most pressing issues facing the industry, including Driver Inc., will be issued by CTA shortly to ensure Ottawa understands our sector’s concerns.

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