Question Period Note: MISCLASSIFICATION OF EMPLOYEES IN THE TRUCKING INDUSTRY

Incorporated drivers in the trucking industry are at times employees misclassified by employers as independent contractors, rather than employees, to avoid obligations under the Canada Labour Code. 

The Government of Canada understands the essential role of trucking industry workers in maintaining access to goods and services across Canada.

Addressing employee misclassification is a key priority, especially where truck drivers are wrongly classified as independent contractors, denying them labour standards and occupational health and safety protections under the Canada Labour Code and employment related benefits such as Employment Insurance and future Canada Pension Plan.

The Labour Program has conducted over 1,200 inspections and outreach sessions to increase understanding and promote compliance among federally regulated employers.

The Labour Program’s collaboration with the Canada Revenue Agency and the TFWP will further strengthen collective enforcement efforts against misclassification.

IF PRESSED (about investments from the Government of Canada to address misclassification)

Since 2023, the Government has invested in measures to address misclassification and protect workers in the federally regulated road transportation industry with funding of $26.3 million over five years.

With this funding, the Labour Program built a team to focus on misclassification in the road transportation sector across Canada. Their work includes: inspection and outreach; sharing guidance and education materials; collaborating with federal and provincial partner agencies, unions and trucking associations.

In 2024, further amendments to the Code came into force to better protect workers against misclassification in the federally regulated private sector.

The amendments strengthened prohibitions on misclassification and a presumption that all workers are employees unless proven otherwise. The provisions place the burden of proof on employers, if they wish to contest a worker’s status as an employee.

IF PRESSED (About Government Action or Enforcement)

Employers who misclassify employees and deprive them of their rights and benefits are in contravention of the Code and may be subject to enforcement measures, such as administrative monetary penalties compliance orders, and payment orders for any wages owed.

The Labour Program has issued 24 Administrative Monetary Penalties and 32 Compliance Orders for misclassification.

Since April 2024, the Labour Program has also issued over 863 payment orders to employers totalling over $4.9 million for unpaid wages in the road transportation sector.

From December 1-5, 2025, the Labour Program carried out a large-scale inspection event in the Greater Toronto and Hamilton Area targeted at high-risk employers suspected of misclassification.

IF PRESSED (About Results from the Inspection Blitz in the GTHA)

To address ongoing concerns about worker misclassification, the Labour Program’s Misclassification Team carried out a blitz in the Hamilton and Greater Toronto Area conducting over 250 inspections from December 1-5, 2025

This coordinated blitz brought together labour standards and occupational health and safety inspectors to ensure employers are complying with the Canada Labour Code.

Many federally regulated trucking companies are located in the GTHA, and Peel Region.  To date, the Labour Program has found that there is the highest concentration of non-compliance related to misclassification in Ontario. Thereby, making the area a good choice for a concentrated effort to tackle misclassification.  

Result are being reviewed; however, where misclassification is identified, the Labour Program will investigate and swiftly issue penalties where violations are found.

The road transportation industry has more than 8,000 federally regulated employers and 260,000 employees. Precise national statistics are limited. However, according to Labour Force Survey data, there are approximately 31,800 incorporated self-employed truck drivers without employees in the federally regulated road transportation industry.

Stakeholders, notably the Canadian Trucking Alliance (CTA), have the incorporated driver model as a significant concern. Under this model, drivers incorporate themselves and offer their driving services as an independent contractor to road transport carriers. These drivers typically operate the transport carriers’ vehicles and exercise little to no control over their work.

By not treating these workers as employees, employers are not providing them with entitlements under the Canada Labour Code (Code), such as overtime pay, annual vacations, general holidays, or rights on termination of employment. These workers may also not receive proper occupational health and safety protections, such as critical safety training and the right to refuse dangerous work, which can also impact the safety of Canadian road networks. Furthermore, misclassification disproportionately affects workers that are vulnerable and from marginalized groups.

As of January 1, 2021, new provisions (section 167.1) of the Code prevent employers from intentionally misclassifying employees to deprive them of their labour standards.

During 2021 and 2022, the Labour Program ran a pilot project to assess understanding of misclassification, promote the new measures and inspect workplaces. The pilot uncovered high levels of non-compliance (60%) in the Ontario Region.

In the 2022 Fall Economic Statement, the Government announced $26.3 million over five years, starting in 2023-2024 for the Labour Program to take stronger, proactive action against non-compliant employers in the road transportation industry who misclassify employees.

Starting in 2023, a dedicated team of inspectors is active in the field, educating, building awareness, and conducting inspections on the issue of misclassification while moving along the compliance continuum process to enforce the provisions of the Code.

On June 20, 2024, further amendments to the Code expanded protections for misclassification to include industrial relations (Part I) and occupational health and safety (Part II). The changes also strengthened prohibitions on misclassification and a presumption that all workers, including gig workers, are employees unless proven otherwise. The provisions place the burden of proof on employers if a worker’s employee status is contested.

Employers who misclassify employees are in contravention of the Code and may be subject to various enforcement measures, such as administrative monetary penalties and compliance orders. Additionally, employers who misclassify employees and do not remit proper entitlements under the Code, may further be subject to payment orders for wages and other amounts owed to their employees.

In March 2025, CRA and Labour Program, ESDC signed an ISA to facilitate inspections and enforcement in the federally regulated road transportation sector as directed in Budget 2024. The ISA allows CRA to receive relevant information from the Labour Program and is a step toward creating a broader information-sharing framework for a bilateral flow of information. As a result of this ISA, the Labour Program has already started sharing information with CRA. As announced in Budget 2025 and introduced through Budget 2025 Implementation Act, No. 1. amendments will be brought to the Income Tax Act and the Excise Tax Act to allow the CRA to share information with the Department of Employment and Social Development Canada for the purpose of addressing worker misclassification.

In October 2025, the Labour Program and the Temporary Foreign Worker Program Branch (TFWPB) signed a Memorandum of Understanding (MOU) to share data and address non-compliance while better targeting enforcement activities, particularly in the trucking industry. Under this agreement, the Labour Program and the TFWPB will share information about complaints and investigations, particularly related to employers who are found to have violated relevant legislation and regulations and/or who have a high number of pending complaints.

The road transportation industry is the primary mode for moving freight across Canada and represents the largest employment sector subject to the Canada Labour Code (the Code).

Misclassification occurs when an employer wrongfully classifies an employee as an independent contractor, which deprives them of rights and protections under the Code. This illegal practice also creates a competitive disadvantage for employers who do comply with legal requirements.

Since 2023, the Labour Program’s dedicated misclassification team, has undertaken more than 1,200 inspection and educational activities.

Since its inception, the team has found misclassification and requested voluntary compliance in 161 cases. Through their efforts, voluntary compliance has been achieved in more than 80% of these cases. For employers who do not agree to comply voluntarily, enforcement actions are taken to ensure compliance with the Code.

As of March 2025, there is an Information Sharing Arrangement (ISA) allowing the Labour Program to share information with the Canada Revenue Agency (CRA). Three data sets have been shared with CRA, including information on employers alleged or found to be misclassifying employees.

In October 2025, the Labour Program and the Temporary Foreign Worker Program (TFWP) signed a Memorandum of Understanding (MOU) to exchange employer compliance data and better target enforcement activities.

The Labour Program has partnered with many provinces on joint operations with their respective Motor Carrier Enforcement Agencies. To date, joint operations at weigh stations to speak with truck drivers on misclassification have occurred in Quebec, Ontario, Nova Scotia, British Columbia, Alberta, Saskatchewan and Manitoba.

A large-scale misclassification and occupational health and safety inspection blitz in the road transportation industry was carried out in the Greater Toronto and Hamilton Area (GTHA) from December 1-5, 2025.