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The strangest thing happened the other day ... I had a carrier that heavily utilizes Driver Inc. ask me to explain the concept, why it was considered wrong, and, subsequently, how to protect themselves from it.
Frankly my friends, rare I know, I was, in the moment, at a loss for words.
However, I quickly regained my footing, tackled the subject head on, and expounded upon the following points;
1) It is highly unlikely any of the people you are paying via Drivers Inc. are paying any income taxes, or WSIB premiums, and it is highly likely most, if not all, of them are collecting GST/HST refunds.
2) Driver Inc. is robbing the government, that's you and me, of literally millions of dollars. If you don't like how your taxes are increasing, or how the country's tax burden is burgeoning, just look at the people you are paying, and ask yourself "how many of them are paying their fair share of taxes while enjoying the same benefits I am?".
3) If a Driver Inc. driver gets hurt on the job, and has to go to the hospital, a WSIB claim is going to be initiated. What will follow relatively quickly, because you are not paying for coverage for that driver, will be a WSIB audit of your company.
4) Things are going to go downhill for you pretty fast from here;
a) WSIB is going to find you are not compliant and they are going to alert CRA. Meanwhile they are going to audit you and assess you for premiums not paid, plus interest, plus fines.
b) CRA is going to come in for an audit and also find you are not compliant. They are going to alert the Ministry of Labour and/or Labour Canada. Meanwhile they are going to audit you, and assess you for source deductions not paid, income taxes not paid, plus interest, plus fines.
c) The Ministry of Labour or Labour Canada, whichever applies, hopefully not both, are going to come and audit you. They are going to, at the very least, assess you for vacation pay not paid to your employees, and order you to pay it to them immediately, plus they are going to levy some fines too.
d) If you do have company employees, and have a group benefits plan for them, they have the right to audit you, and assess you for premiums not paid based on actual employees, plus interest. They can't fine you, but they can, and most likely will drop your coverage. Unfortunately for you, insurance companies talk, and share information on things like premiums not paid. Finding new coverage is going to be expensive.
e) The information your group insurance supplier has is definitely going to find its way to your commercial auto insurance carrier. It just gets downright ugly from there.
For all intents and purposes, you are on the hook for hundreds of thousands of dollars in arrears, interest, and fines. You're pretty much out of business.
However, you can start to protect yourself right now.
1) Get to a lawyer, preferably a labour lawyer, right now. Have the lawyer create an employment contract that details how your driver is going to be paid, what his/her obligations are, and what your obligations are.
2) Have every last one of your Driver Inc. drivers sign that contract before they take another load.
3) Have every one of your Drivers Inc. drivers produce for you a WSIB clearance certificate.
4) Have every one of your Drivers Inc. drivers produce a letter for you from CRA denoting they are indeed an independent contractor.
5) Make sure, over the course of the next year, and every subsequent year, each and every one of your Drivers Inc. drivers drives a truck for some other company.
I think I covered the basics, but if you all can think of anything else I should have added, please please please add that information in a follow up comment.
At the end of the conversation I kind of felt bad for this guy. He is a Brampton carrier, and he truly wants to do it right, but he says everyone that applies to work for him, or any other Brampton carrier for that matter, comes in with an application and incorporation papers. That is the only way they will work, and it doesn't matter if they are drivers, dispatchers, mechanics, safety guys, or administration staff.
What I took, sadly, from the conversation was that the few audits WSIB, CRA, MOL, et al complete every year have absolutely zero chance of stomping out Drivers Inc.
Frankly my friends, rare I know, I was, in the moment, at a loss for words.
However, I quickly regained my footing, tackled the subject head on, and expounded upon the following points;
1) It is highly unlikely any of the people you are paying via Drivers Inc. are paying any income taxes, or WSIB premiums, and it is highly likely most, if not all, of them are collecting GST/HST refunds.
2) Driver Inc. is robbing the government, that's you and me, of literally millions of dollars. If you don't like how your taxes are increasing, or how the country's tax burden is burgeoning, just look at the people you are paying, and ask yourself "how many of them are paying their fair share of taxes while enjoying the same benefits I am?".
3) If a Driver Inc. driver gets hurt on the job, and has to go to the hospital, a WSIB claim is going to be initiated. What will follow relatively quickly, because you are not paying for coverage for that driver, will be a WSIB audit of your company.
4) Things are going to go downhill for you pretty fast from here;
a) WSIB is going to find you are not compliant and they are going to alert CRA. Meanwhile they are going to audit you and assess you for premiums not paid, plus interest, plus fines.
b) CRA is going to come in for an audit and also find you are not compliant. They are going to alert the Ministry of Labour and/or Labour Canada. Meanwhile they are going to audit you, and assess you for source deductions not paid, income taxes not paid, plus interest, plus fines.
c) The Ministry of Labour or Labour Canada, whichever applies, hopefully not both, are going to come and audit you. They are going to, at the very least, assess you for vacation pay not paid to your employees, and order you to pay it to them immediately, plus they are going to levy some fines too.
d) If you do have company employees, and have a group benefits plan for them, they have the right to audit you, and assess you for premiums not paid based on actual employees, plus interest. They can't fine you, but they can, and most likely will drop your coverage. Unfortunately for you, insurance companies talk, and share information on things like premiums not paid. Finding new coverage is going to be expensive.
e) The information your group insurance supplier has is definitely going to find its way to your commercial auto insurance carrier. It just gets downright ugly from there.
For all intents and purposes, you are on the hook for hundreds of thousands of dollars in arrears, interest, and fines. You're pretty much out of business.
However, you can start to protect yourself right now.
1) Get to a lawyer, preferably a labour lawyer, right now. Have the lawyer create an employment contract that details how your driver is going to be paid, what his/her obligations are, and what your obligations are.
2) Have every last one of your Driver Inc. drivers sign that contract before they take another load.
3) Have every one of your Drivers Inc. drivers produce for you a WSIB clearance certificate.
4) Have every one of your Drivers Inc. drivers produce a letter for you from CRA denoting they are indeed an independent contractor.
5) Make sure, over the course of the next year, and every subsequent year, each and every one of your Drivers Inc. drivers drives a truck for some other company.
I think I covered the basics, but if you all can think of anything else I should have added, please please please add that information in a follow up comment.
At the end of the conversation I kind of felt bad for this guy. He is a Brampton carrier, and he truly wants to do it right, but he says everyone that applies to work for him, or any other Brampton carrier for that matter, comes in with an application and incorporation papers. That is the only way they will work, and it doesn't matter if they are drivers, dispatchers, mechanics, safety guys, or administration staff.
What I took, sadly, from the conversation was that the few audits WSIB, CRA, MOL, et al complete every year have absolutely zero chance of stomping out Drivers Inc.
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