Misclassification in the Road Transportation Industry: Awareness Kit
On this page
- What is employee misclassification
- How does employee misclassification affect you as a truck driver
- How are you protected by the Canada Labour Code (the Code)
- Have you been misclassified
- How can you report being misclassified
- How does the Labour Program deal with misclassification
- What can happen to employers who misclassify workers
- How does misclassification affect the trucking industry
- What are the key differences between employees in federally regulated workplaces and independent contractors
- Posters
- Examples of misclassification in the road transportation industry
- Video: Misclassification: Know Your Rights
What is employee misclassification
Misclassification is when an employee is wrongfully classified as an independent contractor. They are then denied rights and protections.
For example, a boss treats you like an independent contractor. But, you work fixed hours for the company and use its equipment. In the road transportation industry, this often leads to classifying truck drivers as independent contractors, when they should be employees.
Some companies misclassify employees as contractors on purpose to:
- lower hiring costs
- simplify payroll
- keep a flexible working arrangement with the misclassified worker
Whatever the reason, misclassification is illegal under the Canada Labour Code (the Code).
Misclassification is illegal even if:
- the employee agrees to it
- the worker is an independent contractor under other laws, including tax or provincial or territorial laws. They may still be classified as an employee under the Code
Since June 20, 2024 Gig workers in federally regulated industries have the same rights and protections as employees under the Code. Now, all workers paid by an employer are their employees, unless proven otherwise. Employers must prove a worker is an independent contractor. These changes will not affect legitimate independent contractors.
How does employee misclassification affect you as a truck driver
Employee misclassification can impact you in many ways. You may lose important rights and benefits as employees. These include fair pay, overtime pay, vacation pay, and safety protections under the Code.
Remember, it's against the law to misclassify an employee.
How are you protected by the Canada Labour Code (the Code)
Under Part Ⅲ of the Code, employees have the right to protections such as:
- up to 4 weeks of paid vacation per year
- 10 paid days of general holidays
- 3 paid days of personal leave
- up to 10 paid days of medical leave (sick leave) per year
- overtime pay
- help (recourse) if you are unfairly fired
Important: Your employment agreement or contract must include key details about wages, work hours, and job protections.
Under Part Ⅱ of the Code, your employer must ensure your safety at work. You can refuse work if you think it is unsafe: Right to refuse dangerous work - Canada.ca
Have you been misclassified
You might be misclassified if you notice these signs:
- not having control over your work schedule or routes
- being told to use company materials, tools, and equipment (e.g., the truck/trailer)
- being prohibited from working for other companies
- not having any risk of loss or chance for profit (e.g., the worker does not assume the costs of the work to be redone)
- being integrated into the company (e.g., the employer logo is used on your uniform, truck, and other tools)
To learn about misclassification and the employer-employee relationship, visit Determining the Employer/Employee Relationship - IPG-069 - Canada.ca
How can you report being misclassified
You can contact the Labour Program to file a complaint or send an email at edsc.erreursclassification-misclassification.esdc@labour-travail.gc.ca to report misclassification. For questions, contact the Labour Program at 1‑800‑641‑4049.
How does the Labour Program deal with misclassification
The Labour Program deals with misclassification through several measures:
- Counselling the employer and obtaining voluntary compliance whenever possible
- Investigating employee complaints and inspecting workplaces
If non-compliance is found, the Labour Program may impose:
- payment orders, including administrative fees
- compliance orders
- Administrative Monetary Penalties (AMPs)
- public naming of employers, or
- prosecution
What can happen to employers who misclassify workers
Employers who misclassify workers may own them back pay, benefits, and taxes. They may also have to pay fines between $1,000 and $12,000, or more, if the employer continues. Employers may face other consequences. This depends on the problem's severity and if it has happened before.
To learn about employer compliance with federal labour standards, visit Employer compliance with federal labour standards - Canada.ca
How does misclassification affect the trucking industry
Misclassification harms more than the workers. It creates an unfair situation for companies that follow the rules. Misclassifying workers gives companies an unfair advantage. It harms the market and makes the industry less fair.
What are the key differences between employees in federally regulated workplaces and independent contractors
Canada's workforce has more independent contractors. They are people who do contract work to complete specific tasks. Being an independent contractor has benefits. It offers flexibility and more freedom at work. But, it can deny workers their labour rights and job protections. Employees have rights. They include the right to unionize. They have protections for health and safety, and labour standards, like minimum wage and sick leave.
As an employee, you have rights and protections under the Code. Some of the benefits of being an employee:
- 10 paid days of medical leave (sick leave)
- 3 paid days of personal leave
- vacation with pay
- overtime pay
- general holidays
- health and safety protections
- employer contributions to Employment Insurance
- employer contributions to Canada Pension Plan
- provincial or territorial workers' compensation benefits
- help for dealing with unfair termination
Independent contractors do not have these benefits.
Posters
Misclassification of employees is illegal, and there are serious consequences for employers
You could be subject to:
- Monetary penalties
- Public naming on the Government of Canada website
- Prosecution
Know your obligations under the Canada Labour Code.
Contact the Labour Program
1-800-641-4049
Truckers, misclassification is illegal
- Are you paid through an incorporated business entity?
- Do you drive a truck provided by your employer?
You might actually be an employee and missing out on important workplace entitlements under the Canada Labour Code, such as benefits, paid overtime and job security.
Report misclassification:
edsc.erreursclassification-misclassification.esdc@labour-travail.gc.ca
1-800-641-4049
Know your rights!
Examples of misclassification in the road transportation industry
1. Example of an employer-employee relationship
Company ABC is a long-distance trucking company. It provides hauling services and hires incorporated drivers. Company ABC owns the trucks workers drive and their license plates. It pays for operating expenses. It pays the drivers a set mileage rate for all miles driven. The drivers must stay in frequent contact with Company ABC's dispatcher. They may be asked to use specific routes. Company ABC resolves customer complaints and may discipline the truck drivers. The drivers must book time off in advance with Company ABC. Company ABC will choose and pay the replacement driver. The drivers must purchase gas at gas stations where Company ABC has accounts. Company ABC does not charge the drivers a fee for using on-board communication devices. Also, Company ABC pays premiums for workers' compensation insurance on the workers' behalf.
It seems like the incorporated workers are employees. The relationship shows that Company ABC, the payer, has the right to monitor, direct, or control how the worker does the work, whether or not the payer exercises this right. The payer provides the equipment needed for the worker to complete the work and is solely responsible for its maintaining and operating expenses. The driver has no risk of loss by working for the payer. They can't make profit, either, as they perform work only provided by Company ABC at a set rate of pay.
To learn more, visit determining the Employer/Employee Relationship webpage
2. Example of an independent contractor
Claudie, a worker, owns her truck. She pays all its operating costs, including licences, fuel, oil, on-board communication system, repairs, maintenance, and insurance. She has a business presence and advertises her company's services online and in local papers. She does work for various payers according to her availability. Company Z, one of her clients, requires her services regularly for hauling woodchips. She negotiated a flat rate of $ 1,000.00 for each trip she accepts and charges GST. She invoices Company Z and is paid only when the work is completed. She can hire helpers or other drivers to operate her truck and she is responsible to pay them. If she gets a traffic or transport ticket, she pays it.
The whole working relationship shows that Company Z, the payer, does not monitor, direct, or control how Claudie does the work (nor do they have the right to). These factors support that Claudie is an independent contractor. She is not integrated into the operating framework of the payer's business.
For more misclassification examples, visit Misclassification - IPG-105 - Canada.ca for federally regulated employers.
Video: Misclassification: Know Your Rights
Transcript for video: Misclassification: Know Your Rights
Are you an employee in the federally regulated road transportation industry? If you cross provincial or international borders, you may fall under federal jurisdiction. Do you know your rights when it comes to employment classification under the Canada Labour Code?
Employment and Social Development Canada's Labour Program presents: Misclassification: Know Your Rights.
What is employee misclassification? Misclassification occurs when your employer does not consider or treat you as an employee when you are an employee. For example, when they consider you to be an independent contractor when you are, in fact, an employee working set hours for them and using their equipment.
Misclassification is illegal. What is the impact of misclassification?
It matters because by not classifying you as an employee, you are missing out on important rights and entitlements under the Canada Labour Code, such as 10 paid days of medical leave, general holidays, health and safety protections, as well as employer contributions to Employment Insurance, the Canada Pension Plan and provincial or territorial workplace injury protection.
What can you do? First, know your rights. The Labour Program is here to help you. Second, if you think you've been misclassified, contact the Labour Program to find out how to file a complaint. Visit our website for resources and contact us for assistance.
In the trucking industry, knowing your rights and entitlements under the Canada Labour Code is essential.
Visit Canada.ca/Labour to learn more.
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