Law Firm: Supreme Court May Have Put Another Nail in the Coffin of Driver Inc.

(June 20, 2019) — In a recent decision, the Supreme Court of Canada considered whether a thorough review and a “business risk” test is used to distinguish employees from independent contractors. And according to Toronto law firm of Fernandes Hearn, this test may be the “final nail in the Driver Inc. model of trucking service” if it finds its way into the transportation industry.

In a recent newsletter, Fernandes Hearn provided a summary of a recent Supreme Court Case entitled Modern Cleaning Concept Inc., in which the critical factor distinguishing employees from independent contractors was held to be the respective degree of risk and the ability to make a profit. The Court held that the relevant risk is business risk, not simply any risk accepted by the worker in relation to his or her working conditions.

In concluding the summary of the Modern Cleaning Concept case, author Rui Fernandes states: “Based on this latest test, the Driver Inc. model will not stand up and an individual will never be found to be operating as independent contractor. Trucking companies should be aware that they are dealing with employees. For companies whose trucks cross provincial borders the Canada Labour Code will apply.”

The Canadian Trucking Alliance is working with government agencies, who are very aware that Driver Inc. participants are now trying to mask their tax evading behaviour through so-called ‘never-never leases’. These ‘leases’ will not withstand the businesses risk test.

CTA is launching an ad campaign this summer to draw attention to never-never lease schemes and to educate Driver Inc. participants that compliant carriers are aware of the practice and signaling to the enforcement community where to look for Driver Inc. misconduct.

“Unfortunately, the non-compliant element of our industry is resilient and steadfast in their determination to sidestep rules and regulations,” said CTA president Stephen Laskowski. “The efforts in response by the responsible, law abiding bulk of the industry must not only match this relentlessness, we must surpass it.

“Simply put, we will never stop pursuing the end of Driver Inc. and we will continue to draw the full weight and attention of the enforcement community upon this practice.”

For the full analysis by Fernandes Hearn, click here.