Trucking Industry Discussions: WSIB/Driver Inc.

Millennial

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Oct 10, 2018
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Someday's I like to play Devil's Advocate, and here are some of my initial thoughts for discussion amongst the Insidetransport Community (I think this forum is the most direct way to communicate to the most relevant and innovative people in this business, btw):


First off, for some reason I keep hearing about the Mr. Bedard @ TFI quotes about Driver Inc. and frankly it sounds weak, desperate and complacent from one of the largest trucking companies in the industry the way this sounds, no?; Especially from a company who's business model has basically been to bully its way around for the last decade or so in the trucking industry using its economies of scale to push competitors out of markets (Or maybe this is their way of setting up a deflection/excuses if TFI's bottom line results are less than expected to shareholders, because I am sure saying "sorry, the industry sucked for another quarter" is getting old for investors, and how many times can you buy companies to add revenue to help manipulate results). This sounds very similar to how I recall hearing the Taxi industry complain about Uber. Where he comes up with his numbers is not cited, therefore not confirmed, and some of the Driver Inc. companies DO actually pay WSIB premiums on the Driver Inc. employee earnings to avoid these penalties, negating this argument completely). We should all look at this as an opportunity to think differently, and if anyone, this guy is someone with the power and influence that could push that!

In dealing with both private insurance and WSIB, has anyone else not found that the WSIB runs exactly like any government organization (?) Fat (as it not lean, and inefficient), expensive (consistent increases, often more than the private insurance premiums), lack of clarity (as in denial/delay of benefits or extremely slow/non-transparent to work with, both as an employer or as an insured)? We all MUST pay WSIB on our employees, but does this really help us, or is it simply the law? Dare I say that we question the relevancy of WSIB, and that it could not be done better (better = more value for our employee insurance dollars as employers). Because we ALL must pay in to WSIB based on our industry performance as a whole, we will all pay based on the crappy standards and performance of others. I guess what my point to all this is maybe it is time we re-evaluate the WSIB system as a whole (even if only specific to "trucking" at this point), and perhaps trucking employees would actually be better insured, through alternative insurance, potentially at better costing to the employer, rather than industry worker injury rates collectively?!

Are we any better protected by WSIB than we are private insurance? I would argue that our O/O's are less exposed than employees and better protected in an incident, particularly in the cross-border line of work; at the very least get better value for the cost. I am curious how others who have experiences feel about this entire situation?

This industry as a whole just seems to be a mess these days in SO many ways, and it seems even the OTA focus has turned to complaining about things, and whining about things being unfair rather than working towards innovative solutions and a genuinely better future in our highly competitive and often extremely low margin business? If something is unfair or inefficient, human nature is to find a better way, yet conformity is the solution for trucking!?


There is a visible ethnic majority that now controls a large capacity of this business, but this majority is not at all close enough to represented within these Industry groups that pioneer legislation, and some would argue, these are the same companies that have grown and taken advantage of the Driver Inc. model. I would also argue the Driver Inc. model has helped these “Law Breakers” solve their driver shortage problem!



Is there a correlation here...possibly!? Maybe we all need to step back and rethink the inclusiveness, collaboration, future well-being, and even the aspects that are “(over) regulated” in our “unregulated” business (Oxymoron’s rarely make logical sense) so we can all be more competitive, safe and efficient. The crappy part is, and I have seen it happen myself over the past couple of years; when profit turns to loss (or even just less profit), pressure and panic mounts, and sometimes our focus on core values unintentionally drift.


I guess my point to all of this: There are a lot of very smart, innovative people in this business, and in a world of technology and disruption our mind-set and discussions should be to think outside the box, and challenge the norm to find better solutions! Maybe we need to rethink even how we come to lead and direct this industry positively. More discussion topics to come…
 
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Drivers Inc costs Canadian taxpayers like you and me billions of dollars, deficit cutting billions in taxes don't get paid mostly by a minority of people in transportation. Some of these driver inc people return to their homelands without ever filing Canadian taxes, other taxpayers get to pay for the Driver Inc's children's schooling, all of us taxpayers get to pay for Driver Inc health care and the health care for their children and their relatives who immigrate to Canada. This has lost the country billions and billions of lost revenue, whats next amnesty for the Driver Inc people? Or maybe Trudeau will send all of them a check.
 
The WSIB system is a completely different issue from the Driver Inc. issue. Yes, WSIB is not as good as private insurance coverage and there is work to be done to improve that system, but it is the system currently in place and legislation says we have to abide by it. I'm sure there are a few carriers employing the Driver Inc. model that are reporting and paying WSIB premiums, but it would be a small percentage. The issue of the Driver's Inc is exactly what Gord mentioned above, they are cheating the system and all of us out of tax revenue and by cheating are able to compete at much lower costs than carriers who are following the rules (whether or not we agree with them). We need now is the Federal government to step up and start enforcing tax and labour laws against these carriers, it seems WSIB is doing its part as far as enforcement goes.
 
Driver Inc. and WSIB are two separate issues. The only correlation is that WSIB is the only one stepping up enforcement against these operators who use the Driver Inc. model and not pay WSIB.

Driver Inc. exists because of a lack of enforcement - as correctly pointed out by Mr. Bedard and numerous others in the industry. Some companies choose to pay their drivers with this method directly to an incorporated account without taking required source deductions and therefore not paying their share of the source deductions. The CPP, EI, EHT and WSIB programs are all effected. Then some (or maybe most) of these incorporated businesses do not report their earnings and thus pay no tax. This affects Canada as a whole. The carriers who do follow the law and pay their employees properly are negatively affected as well because they have to absorb the costs of their share of the source deductions where the carriers who utilize the Driver Inc. do not and therefore are less competitive.

On the flip side, to make matters worse, the government has stepped up auditing of employees who claim meals on their TL2. This is extremely frustrating because they do everything right, the carrier submits regular source deductions but have to deal with the hassle of getting every log page for the tax year.

Either enforce payroll laws or drop the law but the current system of little to no enforcement on Driver Inc. is a big problem. Instead of auditing lots of drivers that is on payroll making regular tax deductions spend more of the government resources getting to the bottom of Driver Inc.
 
Yes, the Federal government should take a more active role in enforcing existing laws pertaining to source deductions. However, the root of the problem lies with the large shippers knowingly participating in this "scheme" to defraud the Canadian public of lawful tax revenue all for the sake of reducing their freight rates. In addition to requiring all of the relevant safety and customs/security compliance participation, these shippers should also ask their "preferred partners" if they are complying with current payroll/tax law. How much extra trouble would that be? They already want to know your annual sales, number of employees, WSIB clearance certificates, CTPAT, PIP, number of windows in your office etc, etc, etc. It would be one more box to fill out when submitting their RFQ. Capitalism works best when all the players are treated equally and the playing field is level.
 
I truly appreciate the discussion thus far; This all also help me to see different perspectives, and appreciate the depth of the issues at hand. Curious, Will WSIB release the companies and amounts that have been fined, or how does that work? Would certainly be an incentive to be legit with employment laws
 
I truly appreciate the discussion thus far; This all also help me to see different perspectives, and appreciate the depth of the issues at hand. Curious, Will WSIB release the companies and amounts that have been fined, or how does that work? Would certainly be an incentive to be legit with employment laws
There was an article that quoted $200,000 in fines, to two companies, I believe that was each, but the article was not 100% clear. Either way that's a lot of money and honestly I hope they hammer them all hard and then follow up with CRA doing the same and drive these companies out of the market.
 
Driver Inc. and WSIB are two separate issues. The only correlation is that WSIB is the only one stepping up enforcement against these operators who use the Driver Inc. model and not pay WSIB.

Driver Inc. exists because of a lack of enforcement - as correctly pointed out by Mr. Bedard and numerous others in the industry. Some companies choose to pay their drivers with this method directly to an incorporated account without taking required source deductions and therefore not paying their share of the source deductions. The CPP, EI, EHT and WSIB programs are all effected. Then some (or maybe most) of these incorporated businesses do not report their earnings and thus pay no tax. This affects Canada as a whole. The carriers who do follow the law and pay their employees properly are negatively affected as well because they have to absorb the costs of their share of the source deductions where the carriers who utilize the Driver Inc. do not and therefore are less competitive.

On the flip side, to make matters worse, the government has stepped up auditing of employees who claim meals on their TL2. This is extremely frustrating because they do everything right, the carrier submits regular source deductions but have to deal with the hassle of getting every log page for the tax year.

Either enforce payroll laws or drop the law but the current system of little to no enforcement on Driver Inc. is a big problem. Instead of auditing lots of drivers that is on payroll making regular tax deductions spend more of the government resources getting to the bottom of Driver Inc.

Jim & I had a very good conversation the other day on this very subject and Jim came up with an excellent method of rooting out Driver Inc. Follow the money. Simply audit every carrier by requiring them to submit their accounts payable GL and their detailed vendor list including amounts paid to each vendor. I know for us in this technology age that would take 2 reports and 10 minutes to complete. When they find a carrier using Driver Inc., audit the Driver Inc. corporations to make sure they are indeed paying their taxes. The government can then take the appropriate steps where necessary.

Most of the work can be done right from the CRA auditor's desk.
 
The other major problem with Driver Inc is when the marriage between the "employer" and the incorporated driver ends, he complains to the CLB, and the employer ends up paying O/T and Vac pay, notice etc. The CLB classifies the driver as an employee.
 
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WSIB actually has a pretty good test to determine if Driver Inc is being used and they also have an anonymous tip line. It's getting all the other government agencies involved and collecting those taxes that are being stolen from us the honest Canadian Tax Payers. Remember if they are willing to go to this fraud level to avoid taxes WHAT ELSE ARE THEY DOING THAT IS ILLEGAL?
 
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