Transport Committee on Oct. 21st, 2025

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting number 11 of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, September 18, 2025, the committee is resuming its study of the changing landscape of truck drivers in Canada.

Today’s meeting is taking place in a hybrid format, pursuant to the Standing Orders.

I'd like to take a few moments for the benefit of our witnesses and our members. Please wait until I recognize you by name before speaking. For those participating by video conference, please click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. For those on Zoom, at the bottom of your screen, you can select the appropriate channel for interpretation: floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

As a reminder, all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

Colleagues, I would now like to welcome our witnesses for the first round of questioning today.

As an individual, we have Mr. Harman Bhangu, member of the Legislative Assembly of British Columbia and jobs and economic development critic, joining us by video conference. Welcome to you, sir.

From the Canada Truck Operators Association, we have Arjun Vishwanth, policy adviser. Welcome to you.

We'll now open the floor to opening remarks. For this, I will turn the floor over to Mr. Bhangu.

You have five minutes, sir.

[Harman Bhangu, Member of the Legislative Assembly of British Columbia, Jobs and Economic Development Critic, As an Individual]

Thank you, Mr. Chair and members of the committee, for giving me the opportunity to speak today.

I want to raise an issue that's doing real damage to our trucking industry and our economy, which is the rise of what’s called “Driver Inc.” On the surface, it sounds like just another business model, but in reality it’s a loophole that’s letting some companies dodge their responsibilities and shift the costs on to workers and taxpayers.

Here's how it works. A driver sets up a numbered company. Maybe they once owned a truck. Maybe they don’t anymore. A carrier then hires that driver through their company, but not as an employee. They’ll pay that incorporated driver, say, $30 an hour for 10 hours of work—that's $300 a day—as a business-to-business payment. That's the difference.

Because it’s structured that way, there are no source deductions—no CPP, no EI, no workers’ comp and no tax remitted at all. The carrier saves a big chunk of money, and the government loses out on tax revenue that should be collected. This isn’t small change. When hundreds or thousands of drivers are being paid this way, that’s millions in CPP, EI and income tax contributions that never make it to the public purse. It also gives an unfair advantage to companies that play this game over the ones that follow the rules and hire drivers properly.

For the drivers, it’s risky. Many of them don’t fully understand what being incorporated means. They think they’re getting a better rate, but in the end, they’re on the hook for their own taxes, they don’t get paid sick days, they get no overtime or holiday pay and they have no real protection if they’re injured or laid off.

It’s gone even further. I’ve heard stories of temporary foreign workers coming into the industry who later apply for permanent residency and then get pressured into these same set-ups. Sometimes a local partner helps them register a company or co-signs for a truck loan so they can keep working, but the driver isn’t really independent; they’re still dispatched, directed and controlled by the carrier. It’s a paper shell to avoid employer obligations.

That’s not entrepreneurship; it’s exploitation. It’s unfair not just to the workers, but to every law-abiding trucking company, every taxpayer and every small business that does things the right way.

This also raises safety concerns. When a driver isn’t technically an employee, who’s responsible for ensuring training, hours-of-service compliance or vehicle maintenance? When something goes wrong, accountability gets blurred, and that’s dangerous for everyone on the road.

The federal government has said this practice violates the Canada Labour Code, but it’s still happening every day. You can go online and see job postings that say “drivers must have their own company”. Everyone knows what that means.

Here’s what I’m asking this committee to consider.

First, draw a clear line. If a driver works full time under a company’s control, using its trucks and dispatch, they’re an employee, plain and simple.

Second, enforce it properly. Penalties have to have teeth, so that companies can’t just shut down and reopen under a new name.

Third, protect vulnerable drivers, especially new immigrants and temporary workers. Make sure they understand their rights before they sign any kind of incorporation paperwork.

Fourth, level the playing field. Honest carriers should never be at a disadvantage for following the law. Trucking keeps this country moving, but the system only works if everyone plays by the same rules. Driver Inc. might look like a clever workaround on paper, but it’s draining our economy, weakening protections for workers and creating unfair competition in an industry that already operates on tight margins.

It’s time to close the loophole, enforce the rules and protect the integrity of one of Canada’s most important industries.

Thank you, honourable Chair. I’d be happy to take any questions.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Bhangu, for your opening remarks.

Next, we'll go to Mr. Vishwanth.

The floor is yours, sir. You have five minutes.

[Arjun Vishwanth, Policy Adviser, Canada Truck Operators Association]

Thank you.

Good afternoon, Chair and members of the committee.

Thank you for allowing me to be here today.

My purpose here is simple. I want to correct a false narrative, set out the facts and offer a constructive set of recommendations.

Let me begin with the truth. Driver Inc. is not a legal status. It appears in no statute, no regulation and no court decision. It's a label manufactured and weaponized by lobby groups representing large monopolistic carriers that have lost their competitive edge and that have now chosen to destroy their competition instead of improving their own performance.

That competition is made up of small and medium-sized family-run businesses, many by Canadians of South Asian heritage, who built this industry over the last 40 years with their sweat and sacrifice and their treasure. These owners now find themselves branded as cheats, illegals and tax evaders, and they face disproportionate audits, reputational harm and, too often, racial slurs from people, unfortunately, even in positions of authority. Terms such as “flying carpets” and “towel heads” are frequent. This is not enforcement. It's prejudice being asked to translate into policy.

There are two myths that fuel this problem.

The first is the so-called billion-dollar loss to CRA. This number has never appeared in any CRA audit or federal budget report. It originates from a flawed lobbying costing model that treats HST as income, ignores caps on CPP and EI, assumes employer health tax, from which small carriers are exempt, and flattens WSIB premiums that are actually experience-rated. When these errors are corrected, the claimed loss collapses roughly to 95%. There is no billion-dollar loss to the treasury. There's a billion-dollar lie in the public discourse.

The second myth being perpetuated is that small carriers, the competition, force drivers to incorporate. In truth, it often costs more to engage as an incorporated contractor, once HST, gross ups, administrative costs, legal exposure and accounting risks are considered. If greed were the motive, payroll would be cheaper to us. Drivers incorporate for autonomy, for control over their schedules, for their route decisions, for their family time and for their financial future. It's a voluntary, lawful choice. Incorporation is not illegal.

Herein lies the hypocrisy, and I would like to highlight this. These same large carriers that complain about the Driver Inc. model hire the very same drivers under another name. They're called “owner-operators”. When they hire an owner-operator, the owner-operator goes and gets a bunch of incorporated drivers. When they do it, it's industry standard, but when small carriers do it, it's illegal. This double standard has nothing to do with safety or taxation. It's about market control.

In terms of safety, we want the bad actors, who have no business driving a truck, to be weeded out. There is no correlation between safety and driver status. Safety in Canada is already fully regulated under the national safety code, which contains 16 national standards. Eleven of those relate directly to the driver of the vehicle and maintenance. Safety is enforced and is status-neutral. We do not need weigh-scale inspections turning into tax audits or unannounced visits to company premises to cross-reference payroll with hours of service data. Such measures would inevitably violate section 8 of the charter, protection against “unreasonable search or seizure”, and section 15.

There is also jurisdictional boundary. Tax and incorporation status is a federal responsibility. Section 92 of the Constitution Acts states that delegating this to provincial enforcement would be unconstitutional.

I want to provide a bunch of recommendations to this committee.

Voluntariness is the key factor that's missing in IPG-069, IPG-105 and the Sagaz rules. With those three combined, jurisprudence right now tells us that four factors determine the employee-employer relationship: control over schedule, ownership of equipment, the chance or risk of profit and loss, and integration into the employer's business model.

Drivers have never been consulted in this room. Small and medium-sized businesses are not being consulted in this room. We'll never ask the driver why he or she incorporates. I'd like to recommend to this committee that the only reason a person is told that they are not independent contractors or that they're dependent is that they don't own their own equipment.

Let's put that in perspective for a second. A truck costs $250,000. That's a quarter of a million dollars. To own equipment worth a quarter of a million dollars to be eligible for incorporation is absurd. This would have the same effect as telling a lawyer they need to own the entire law firm, or telling a journalist they need to own the entire paper to be incorporated.

Our members want to highlight a problem here. They're being disproportionately audited and disproportionately affected and disproportionately facing the harm of regulation. Section 5 of the Canada Transportation Act mandates that a transportation policy foster competition and efficiency for the benefit of taxpayers. Any enforcement that disproportionately impacts small or minority-owned carriers violates that principle. Section 53 requires all policy decisions to remain consistent with section 5. We cannot legislate to disproportionately affect any one group.

I would have more to say on this during the rounds of questions from you folks. I would invite technical questions. I can use my time to answer those.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Vishwanth.

Just for the benefit of our witnesses, I have two cards, a yellow card and a red card. If I raise the yellow card, it means you have 15 seconds left. If I raise the red card, I would invite you to please wrap up your remarks. I want to ensure as the chair that I'm providing all members with an equal opportunity to ask questions.

With that, I'll now turn the floor over to Mr. Albas to get us started.

Mr. Albas, the floor is yours for six minutes.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

Thank you, Mr. Chair.

Thank you to all of our witnesses for being here today.

First, MLA Bhangu, thank you very much for your public service. I certainly appreciate your making time for our committee.

I would like to start by asking you about your history. I understand that you spent a long time, and your family even longer, in heavy trucking. Could you give us a little background on your experience?

[Harman Bhangu]

Thank you.

Yes, I was involved in trucking before I got into politics. It was in the gravel trucking industry, doing a lot of roadwork. I have seen this be an issue first-hand. A lot of issues arise with this. There are safety concerns. There's obviously the tax that's not getting filtered down in terms of taxpayers.

As the other member here was saying, that there isn't a high scale of this happening and there aren't companies that actually want this addressed is false. I worked in a smaller-scale business. My family has been in the trucking industry for a while. This has been a constant occurrence. It's what a lot of people want to get addressed. It leads to lower rates. It gives people the advantage of getting in there and cutting the rates. The market's always stagnant.

Yes, truckers are at a big disadvantage. It's really tough, with tight margins. This just adds to that burden. That's where I feel we need to have this addressed completely. Businesses come to me every single day—this was especially when I was transportation critic—and they bring up these concerns time and time again. There are ways that temporary foreign workers have come in and will get an incorporated company. The next thing you know, they're taking loads and they're not even checking them. They're literally being extorted for work. It's really sad to see this happen. When I have numerous calls from truckers directly involved in this, it's really concerning.

I really thank you for having me here to speak on this very important issue.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

It is important. It is affecting British Columbians and Canadians. Many families' lives have been shattered. That's not to say that there isn't also the issue that you've been talking about here today, where people aren't paying their taxes.

I just want to really hone in, though, on your comments around the temporary foreign worker program. We've heard that in central Canada. Could you please elaborate a little bit more about the temporary foreign worker program and the model that's being done? It sounds like the same kind of exploitive behaviours.

[Harman Bhangu]

Right now, what happens is that a temporary foreign worker comes in, a company gets an LMIA and he'll start driving for them. Later on, they'll find a way to get him a permanent residency. When they get him the permanent residency, they're like, “Hey, I got you permanent residency. Why don't you get incorporated now and we'll set up a company? I'll just pay you a flat fee. You'll run it like your own business.” The thing is that a lot of the temporary foreign newcomers get exploited. They get taken advantage of. There is no education concept of it to actually teach them how the business process works and how to set up a proper business and collect tax.

Another issue they end up running into is that when they want to get financed to get a mortgage or buy a vehicle, they can't show the income. They don't qualify that way. That's when the real wake-up call happens.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

We heard earlier from our other witnesses that some drivers will incorporate for autonomy or for family time or for control of their routes, but you're not talking about independent contractors who are doing bona fide operations as an incorporated company. You're talking about people who are being pushed into these situations and have none of these things. Is that correct?

[Harman Bhangu]

Yes, that is correct, and to say that they get to control the times and everything.... A lot of companies do run on that. You give them your availability, and they'll schedule you accordingly. This isn't way back 20 or 30 years ago. As driving companies, we've adapted. We want people. We realize there is a family aspect to it, and there will be days that they need off. We work with our employees all the time, and that is a very important part of this.

If you go the other route and do it in the incorporated way, what happens if you get an injury? Where do you go? What are the processes? This is what's not being told to a lot of the temporary foreign workers and people who get permanent residency and go on in this way of doing business. It's setting them up for failure.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

When someone pushes someone into this kind of situation, you said that they'll say, “Okay, I'm going to set you up with a truck.” Oftentimes, the truck isn't safe, and, as you said, there is an education gap of what they're getting into and the liabilities the truck may have. I've heard from truckers in Quebec who don't even have insurance.

What kinds of further problems can someone find themselves in when they're in this kind of a situation?

[Harman Bhangu]

As you said, if there is ever an accident, where do you actually go? Where is the liability on this?

Also, it's really concerning to me that there is no actual way of having some sort of procedure that protects these drivers, through an education process or something. I've seen time and time again drivers being exploited, and when they push back.... The problem is that they don't want to get vocal about it because they're afraid. Some people will literally hold deportation over their heads. You tell me.... If you're trying to put money on the table for your family and kids, you're stuck in a very terrible situation. This has to be addressed.

[Dan Albas, Conservative, Okanagan Lake West—South Kelowna, BC]

Just to finish off, you've had the benefit of working in an industry that you said has very tight margins, and so has your family. Would you constitute this as being legitimate competition, or is it undermining the whole industry with an unsafe business model?

[Harman Bhangu]

This has been undermining the industry. This is why you see stagnant trucking rates, and truckers always complaining about why the industry is a complete wreck and is not profitable anymore. If it's not profitable here, of course you're going to go to a model of temporary foreign workers, where you're bringing in people and literally exploiting them to do a job that even Canadians wouldn't want to do. That is, frankly, unacceptable.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Bhangu. Thank you, Mr. Albas.

Next, we'll go to Mr. Gaheer.

Mr. Gaheer, the floor is yours. You have six minutes, sir.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Chair.

Thank you to the witnesses as well for appearing before the committee.

This issue is very important to me for several reasons. One is that my riding of Mississauga—Malton is a transport hub. It includes Pearson airport. It has a big South Asian population.

The Globe reported a couple of years ago that one in five truck drivers in Canada is South Asian. That number is probably even higher for Ontario. A lot of those carriers call my riding home, and a lot of those drivers are actually in my riding as well, so, again, this issue is very important.

I want to talk about incorporation generally and talk about incorporation as a lawful and widely used model across multiple professions. Trucking is simply one of them. I feel that this model is often demonized, when it's not the actual model of someone incorporating that is the problem; it's the enforcement behind it that is a problem, and perhaps bad actors. Inherently, however, I don't think the model itself is flawed.

We'll talk about Driver Inc., Mr. Vishwanth.

This term means different things to different people, so I stay away from this term. One definition that it's taken on in the last couple of years is that drivers are intentionally being misclassified. They are not being told the benefits, the pros and cons, of either model—being an employee or being incorporated. Without being told what those are, they are being incorporated, and corporations are being opened for them in that sort of model.

Mr. Vishwanth, in your view, in the sample size you have of the companies and drivers you deal with, is this issue of misclassification a widespread issue?

[Arjun Vishwanth]

The members who are part of our organization have seen a disproportionate number of misclassification audits.

Going back to the question of whether the drivers know which model is better, you have to understand one thing: No one forces a driver to incorporate. There's no benefit from it, no profit from it, to anyone. CRA already has tools in its arsenal—the PSBs, the integration of T2 and T1 and the T4A —to weed out anybody who's cheating on tax. There is really no profit to anyone in forcing any one person to go out and incorporate more of the others.

The issue is about control. Drivers do not want to be told when to drive, where to drive, what time to show up to work, when to take a lunch break, when they can go to work. Most importantly, these people are away from their families for weeks on end, so they want to arrange their time in such a manner that they can spend time with their families. If you are an employee, you can't do that. That's one of the biggest reasons why drivers incorporate—to be able to control their own family time. The narrative that somehow people forced them to do it has no evidentiary basis, nothing.

I also want to bring your attention to the material I filed. We have a technical response to the costing model of the “billion-dollar loss”. My model is built on proper real-world inputs that make no arbitrage for one person to provide services either as an employee or as a contractor.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you.

Just on that last point, that's something I've heard from companies and carriers themselves as well. Sometimes this model of drivers incorporating actually ends up costing them even more. I know of several carriers within my riding that have a mix of both. They have employees, and they have incorporated drivers, and they give both sides access to all those employee benefits. In the end, that model is actually costing them a little bit more.

[Arjun Vishwanth]

As the model put before this committee says, it costs a company around $101,000 to retain the services of a driver under the employee model. When you actually do the analysis, it costs about $96,000 to engage the same driver under an incorporation model, but you also have to take in the HST gross ups, the administrative overhead and the legal expenses required in having to deal with the misclassification audit. It actually exceeds that and accounts for about $110,000 under the incorporation model. So, you'd be saving when someone comes in as an employee.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Oftentimes, I hear from the carriers in my riding that the drivers themselves are asking for this model of incorporation, simply because their friends might be using this model because that's the way others have done it before them.

[Arjun Vishwanth]

Yes. I have done this for 15 years. You can go to any company to ask them if they would hire a payroll driver, and they'll say yes. Ask a driver if he wants to work under a payroll, and he'll say no. That is a fact.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

When we talk about tax, this model is also demonized because the claim is made that tax is avoided in incorporation. If that's happening—and on what scale that's happening, I don't know—I think the solution you already mentioned was to just make the T4A mandatory.

[Arjun Vishwanth]

Yes, you can do that. Also, there's an information gap that's missed in this committee. A person filing incorporation tax status does it as a T2, but they also have to file a T1 for dividends and taxes they file thereafter. It's called the integration model, so there is no tax loss. A person filing taxes under an incorporation model will end up paying personal taxes as well. That's the integration model.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

When we talk about safety, this is something that—