Legal Corner

Whether a driver is an “employee” or an “independent contractor” in relation to the carrier company is often the subject of litigation. The implications for the carrier company and the driver, who depend on the characterization of the relationship, include: (i) tax consequences and obligations; (ii) employment insurance entitlement and obligations; (iii) civil and regulatory liability; and (iv) entitlement to benefits.

Typically, the carrier company will want a commercial driver to be characterized as an “independent contractor” instead of an employee, so that they have less obligations to, and less liability for, the driver. However, just because the parties may intend to enter into an independent contractor arrangement, it does not mean that the Court will necessarily see it that way. In considering the nature of the relationship between the driver and the carrier company, the Court will look at a number of factors1:

  • The level of control the carrier has over the driver’s activities. Typically, the more control the carrier has over the driver’s activities, the more likely the Court with find an employment relationship exists. However, where the driver is a highly skilled professional, who would need little supervision regardless of whether he/she was an employee or independent contractor, this factor is often an neutral one.

  • Whether the driver provides his/her own equipment. Typically, the fact that the driver provides most or all of his/her own equipment weighs in favour of finding an independent contractor relationship. If a driver supplies his/her own truck and bears the cost of maintaining the same,
    he/she is more likely an independent contractor than an employee.

  • Whether the driver hires helpers. Typically, if the driver is at liberty to hire assistants or to substitute another driver at his/her own cost, this would suggest a relationship of an independent contractor. However, if the driver never actually exercises any of these rights, this factor might be given little weight.

  • The degree of financial risk taken by the driver. Usually, the more financial risk the driver bears in relation to trucks, equipment operations, insurance, etc., the more likely it is that the relationship is one
    of an independent contractor. If, for example, the only financial risk borne by the driver relates to their contractual obligation to pay any fines they incur, the driver will more likely be treated as an employee.

  • The degree of responsibility for investment and management held by the driver. The more responsibility the driver has for investing and managing their work in order to meet their obligations to the carrier, the more likely they are to be considered an independent contractor.

  • The opportunity for profit. If the driver has no real opportunities to earn more of a profit (for example, by negotiating the rates of pay, changing the efficiency of operations, etc.), the more likely the driver will be classified as an employee, not an independent contractor.

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