Transport Committee on Oct. 21st, 2025

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

But it's the position of you and your organization that in order to be in compliance with the laws, in order for a truck driver to incorporate, they need to own that truck.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Lawrence.

[Arjun Vishwanth]

Those were not my comments.

[The Chair, Liberal, Peter Schiefke]

Finally for today, we'll go to Ms. Nguyen.

Ms. Nguyen, the floor is yours for five minutes, please.

[Chi Nguyen, Liberal, Spadina—Harbourfront, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for joining us today. It's been really illuminating and helpful testimony in understanding this set of issues.

Mr. Vishwanth, you talked about bad carriers and how enforcement should focus on them. Can you talk a little bit about the appropriate role for the federal government here and what the province can do to hold companies accountable?

[Arjun Vishwanth]

In terms of bad actors, I can speak specifically about Ontario. The Ontario MTO has an administrative regime called the CVOR on the overall violation rate. It is a pretty well-oiled machine. It's been in place for many years. I can tell you that in the GTA, in a sample-size distribution of some small to medium-sized businesses, their overall violation rate is less than 5%. That is in the top one percentile of companies that operate in Ontario.

The issue is that.... When it comes to safety, we all share the same concern. A bad driver should be weeded out. We don't have an argument on that. The issue is that when you conflate that issue with Driver Inc., tax evasion, cheats and everything else, it disproportionately affects one community. That's my problem.

[Chi Nguyen, Liberal, Spadina—Harbourfront, ON]

Following on that, if there is misclassification happening—it seems that there is some in the system—what is the right approach that you would recommend so that we can deal with those companies to make sure they're not shirking their responsibilities?

[Arjun Vishwanth]

The problem I have with the current ESDC approach to misclassification is that they don't have a very liberal approach to it. They narrow it down to whether or not you own equipment and tools. The effect it has on drivers who don't have the financial means to own a truck is that they're squeezed out of the market. I'm saying, modernize that test and update it. The Supreme Court has given us guidance on it. It says that you take all of the factors in a holistic approach.

I would specifically recommend that we replace the ownership of trucks with voluntariness. That seems to be the problem everybody has, that somehow the small and medium-sized businesses force drivers. That's not the case. Leave the voluntariness to the driver. Let the driver choose if they want to be an employee or if they want to be an incorporated driver. To not allow that is to take a very paternalistic view, and it is economic gatekeeping.

[Chi Nguyen, Liberal, Spadina—Harbourfront, ON]

There have been comments about newcomer drivers feeling targeted or mistrusted during inspections. How does the CTOA think the government could make enforcement more equitable and culturally competent and not target certain communities?

[Arjun Vishwanth]

Keep scales and weigh-in inspections to safety. Don't make it about status or about corporate documents. That is not their jurisdiction. That's the federal government's jurisdiction. Weigh-in scales and scale inspections should be about the mechanical fitness of the truck and the driver safety, and nothing else. To do anything more would be overreaching, and it would have a disproportionate effect on people not intended to receive that.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Nguyen.

On behalf of all members, I would like to thank Mr. Vishwanth and Mr. Bhangu for their appearances before us today and for sharing their testimony with us.

Colleagues, we're going to suspend for a couple minutes to transfer over to our second panel of witnesses.

The meeting is suspended to the call of the chair.

[The Chair, Liberal, Peter Schiefke]

I call this meeting back to order.

Colleagues, I do believe that there is a resolution with regard to the motion put forward by Mr. Barsalou-Duval. For that, I will turn the floor over to Mr. Kelloway to read out the text. Then I will ask for unanimous consent.

Mr. Kelloway.

[Mike Kelloway, Liberal, Sydney—Glace Bay, NS]

I wasn't so much going to read out the text but just mention the general intent of MP Albas's amendment about the list of information that we're seeking. We're asking for the same for everyone who has attended the study and who will attend the study—the same for all, universal, basically. I think that's the general intent. I don't have any wording per se. I'm sure we can draft something very quickly. It's a one- or two-sentence amendment.

That's the general intent here. I think we're all okay. We support that.

[The Chair, Liberal, Peter Schiefke]

Are we all in agreement, colleagues?

Mr. Barsalou‑Duval, do you agree?

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I agree. Basically, the idea is to replace “Canada Truck Operators Association” with all the organizations that have testified before this committee as part of this study.

[The Chair, Liberal, Peter Schiefke]

I think everyone is fine with that.

Does that work for everybody?

(Amendment agreed to)

(Motion as amended agreed to [See Minutes of Proceedings])

Thank you very much, colleagues.

I now have the pleasure of welcoming our next round of witnesses.

Colleagues, appearing before us for our second round, we have, from the Office of the Auditor General of Ontario, Shelley Spence, auditor general; as an individual, Ritesh Kotak, lawyer and technology analyst; and from Mitton & Associates Inc., Blaine Mitton, president.

Welcome to you all. It's a pleasure to have all three of you here.

I'll begin with opening remarks.

For that, I will turn the floor over to you, Auditor General. The floor is yours. You have five minutes.

[Shelley Spence, Auditor General, Office of the Auditor General of Ontario]

Thank you.

Good afternoon, Chair and members of the committee. Thank you for the opportunity to appear before you to discuss our office's work on commercial vehicle safety and enforcement in Ontario.

My office is currently conducting an audit of the commercial driver truck licensing. Unfortunately, I cannot discuss this audit until it's tabled to parliamentarians in Ontario. However, today I can discuss an audit that was conducted in 2019 on commercial vehicle safety and enforcement, so most of the facts and figures I will be speaking about are from this time frame.

We did the audit because Ontario's truck traffic increased by about 10% between 2009 and 2018. Commercial vehicles were involved in over 182,000 collisions in Ontario, resulting in nearly 44,000 injuries and 1,180 fatalities, between 2008 and 2017.

More recently, publicly available statistics show that from 2018 to 2021 there were 78,000 collisions, and from 2018 to 2023 there were over 16,000 injuries and over 700 fatalities. According to the Ministry of Transportation of Ontario, MTO, the direct cost of large-truck collisions, including property damage, health care and emergency services, was approximately $2 billion from 2011 to 2015.

Our main audit objective was to assess whether MTO had efficient and effective processes and systems to carry out safety programs that promote and enforce the operation of commercial vehicles in compliance with legislative and policy requirements. I will start with what we found regarding inspections. The number of roadside inspections that the ministry conducted decreased by 22% from 2014 to 2018. These inspections can identify driver violations and mechanical defects in the vehicle, among other things. If MTO had continued to conduct the inspections at the 2014 level, we found that it could have removed an additional 10,000 unsafe vehicles and drivers from Ontario's roads.

In the two years preceding our audit, MTO had not inspected any of the vehicles in 56% of Ontario's 60,000 commercial carrier businesses, even some of the ones with the highest collision rates. Most of the inspections were performed on provincial highways. As a result, local haulers, who operate on municipal roads, were unlikely to be inspected. We noted that about 68% of truck collisions happened on municipal roads.

The next findings related to training and testing. There are drivers of large trucks who do not require a class A licence, like dump truck drivers, and they were involved in 393 at-fault collisions per 10,000, compared to 213 for class A drivers. MTO allows some carriers to train and test their own employees, and they had a licence pass rate of 95%, compared to 69% at Ontario DriveTest centres. Our audit found that commercial vehicle drivers are not subject to mandatory drug and alcohol testing, either before or during their employment. From 2014 to 2018, there were 244 collisions involving drivers under the influence, 21% of which resulted in an injury or a fatality.

Our audit's main conclusion was that MTO did not have fully effective and efficient processes and systems to consistently carry out safety programs that promote and enforce the operation of commercial vehicles.

Our office issued 19 recommendations consisting of 51 actions. This included that the ministry should determine the optimal number of annual inspections, develop a province-wide enforcement officer staffing plan and extend mandatory entry-level training to other licence classes outside of class A. At the time, the Ministry of Transportation of Ontario agreed with all 19 of our recommendations.

Our office follows up on recommendations at the two- and five-year points. In 2024, five years after our 2019 audit, MTO had fully implemented 51% of the actions we recommended, was in the process of implementing an additional 35%, and would not be implementing 14% of the action items.

I believe you will find these issues and recommendations relevant for all Canadians.

Our reports are online and our follow-up reports are as well. Do visit our website. You can read the whole 2019 audit.

Thank you, Mr. Chair and committee, for conducting this study and for your interest in our work.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Auditor General Spence.

We'll now go to Mr. Kotak.

Mr. Kotak, the floor is yours. You have five minutes for your opening remarks, sir.

[Ritesh Kotak, Lawyer, Technology Analyst, As an Individual]

Thank you.

Good afternoon, Chair, members of the committee and everyone here today in person and watching virtually.

I appreciate the opportunity to address this committee on an issue that has significant implications from many perspectives.

First, my name is Ritesh Kotak. I am a technology analyst and lawyer licensed in Ontario, and I practise in the area of labour and employment, corporate law and also technology law. Prior to becoming a lawyer, I worked in the space of cyber and digital crime. I have advised businesses and presented globally on the intersection of law, technology and society. Hence, I'm hoping to wear both hats and provide my thoughts on Driver Inc. from a legal and a technology perspective.

Driver Inc. alludes to models whereby trucking companies misclassify drivers as independent contractors instead of employees. There have been many situations where the drivers believed that they were employees but were instead misclassified. The circumvention creates an environment for the business/employer to avoid costly employee overhead and reduce costs.

I would like to quickly go over the two classifications. An employee works under the direction and control of the employer. Their hours, methods of work, and priorities are largely dictated by the employer, and they form part of the employer's organization. An independent contractor, by contrast, operates their own business. They decide how the work is done, supply their own tools, bear financial risk and can profit from the efficiency. There is no requirement for the organization to which the contractor is providing services to deduct taxes, CPP and EI, pay vacation pay or a minimum wage or provide benefits. In short, employees serve the business, while independent contractors run their own business.

The courts and tribunals have looked at the following factors when classifying whether someone is an independent contractor or employee: the level of control the employer has over the worker's activity; the worker's ability to be hired by other companies for the provision of service; the worker's ability to hire other helpers; whether the employer sets the hours of work, the location and the amount of work to be completed; whether adherence to procedures is required, such as uniforms and mandatory attendance; and whether compensation is paid via payroll or through an invoice.

Misclassification denies workers basic protections. For compliant businesses, this creates an uneven playing field, as those using Driver Inc. can undercut rates by more than 30%.

From a technology perspective, this is a double-edged sword. It can help enforce compliance, but it can also enable circumvention. Digital platforms and algorithmic management can be leveraged to identify individuals who may be misclassifying. In addition, there are numerous data points that can be examined to verify and validate the employment status.

Finally, I want to touch briefly on the ease of incorporation. First, I believe that red tape reduction is a positive thing. However, systemic and structural issues may be a contributing factor.

Creating a corporation in Canada is remarkably simple. Beyond a NUANS name search, which checks only for similar names, there is a minimal scrutiny of the process or the structure of the entity. This simplicity makes it easy for carriers to pressure drivers into incorporating, which will further perpetuate the Driver Inc. model. I will also mention that individuals may not incorporate if they are making under $30,000.

Legal education can probably go a long way in ensuring drivers know their rights under the legislation. It can help drivers avoid unnecessary incorporations and learn about the benefits and risks of incorporation.

Moving forward to what I hope I can expand on during the questions, if we want to balance fairness while maintaining integrity in the process, we should consider addressing stronger enforcement, audits of carriers, technological solutions to flag potential violators, and policy reform that maintains the ease of incorporation with safeguards against misuse.

Thank you. I look forward to your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Kotak.

Next we'll go to Mr. Mitton.

Mr. Mitton, the floor is yours. You have five minutes, sir.

[Blaine Mitton, President, Mitton & Associates Inc.]

Thank you, Mr. Chair and members of the committee.

I work in mergers and acquisitions across Canada's transportation logistics market, giving me a broad view of how the Driver Inc. pay model is undermining industry, integrity and fair competition. Canada's trucking industry is one of the nation's largest economic engines, representing roughly 6% to 8% of GDP, but today its foundation is being eroded—not by lack of laws but by the failure to enforce them.

Driver Inc. is a pay model where drivers are misclassified as incorporated contractors to avoid CPP, EI, WSIB and employee benefits. Tens of thousands of drivers now fall under this scheme, and it's spreading rapidly. This is not about new legislation. It's about enforcing the laws we already have, laws that honest Canadians follow and dishonest carriers ignore.

Here is the scale of the problem. Across Canada, there are about 376,000 class A trucks in operation. If even half are tied to the Driver Inc. fleets, that's roughly 150,000 tractors operated by misclassified drivers. Each represents about $15,000 a year in lost taxes and social contributions, a shortfall of $2.25 billion annually, not from loopholes but from inaction. That's enough to fund a major highway or deliver tax relief to thousands of small businesses, simply by enforcing the law.

Then there is CRA's capacity versus reality. The CRA employs 60,000 people, with about a $5.6-billion annual budget. In comparison, the U.S. IRS employs only 100,000 employees, when they have a 10:1 ratio in terms of population. With CRA's resources, the tools already exist. If just 100 auditors were assigned full time to non-remitting fleets, they could recover $1 billion per year in lost taxes, a 65:1 return on investment. This is not a resource problem; it's a management and priority problem. Let's start November 1^st and get it right.

Regarding competitive distortion, Driver Inc. doesn't just cheat the government; it cripples legitimate carriers. A legal employee driver costs a company about $105,000 per year once wages, payroll taxes and benefits are included. A Driver Inc. contractor, on the other hand, costs about $60,000 with no deductions, no benefits and no compliance. That's a $45,000-per-driver advantage achieved purely through tax evasion. For an 800-tractor operation, that's $36 million in annual advantage gained by breaking the law. Honest carriers cannot compete on those terms.

Note that we heard from this type of carrier in one of the presentations earlier and saw what he is leaving on the table. That can't last for long. He is a man of character, I must say. To add injury to this, his business has gone down by 25% while he's watching the Driver Inc. businesses go up. That's totally unfair.

Enforcement is the solution. There must be a penalty ladder. Enforcement must be clear, consistent and escalating: provide Driver Inc. companies with a 90-day compliance window. All identified carriers are notified that they must place incorporated drivers on payroll or prove legitimate owner-operator status and CRA- and Transport Canada-verified compliance.

For the first offence after the 90-day window, there should be a fine of $50,000 per vehicle, plus back taxes and interest. For the second offence, there should be a fine of $100,000 per vehicle, plus back taxes and interest, a three-year retroactive assessment and public disclosure. Punishment for the third offence should be the suspension and revocation of CVOR and NSC authority until compliance is verified. Penalties must make cheating unprofitable. If a carrier can pay $500,000 in fines to save $1.5 million through non-compliance, enforcement has failed.

Finally, publish quarterly enforcement reports showing audits, penalties and recoveries. That's how we build trust.

For the broader impact, I'm going to use the Peel example. In Peel Region, where Driver Inc. took root, the erosion of law and order is visible. There are 1,100 break and enters, 400 violent robberies, 2,100 vehicle thefts and $48 million in drug seizures, and that's just so far this year. Last year, there were also 220 tractors and 52 trailers stolen, worth $35 million to $40 million, and this year the run rate is about the same.

These aren't isolated crimes. They reflect a loss of respect for law and order across the community and spread out across Canada. A segment of our society now requires firm enforcement, as was discussed the other day, because trust and voluntary compliance are no longer apparent. When law-breaking becomes tolerated in one area, like tax evasion through Driver Inc., it spreads to other areas, like robbery, vehicle theft and safety, insurance and cargo integrity. This is a breakdown of our compliance culture, and CRA's silence enables it.

A real enforcement plan would do the following: match payroll data to vehicle registration and T4 filings versus plated tractors; audit the top 300 Driver Inc. carriers—I'm sure we can get you a list of those—starting with the largest offenders; apply the 90-day compliance window and penalty ladder; coordinate with Transport Canada and provincial authorities; publish quarterly results to keep enforcement transparent. This framework would recover billions of dollars and restore fairness almost overnight.

In conclusion, Canada doesn't lack rules; it lacks enforcement. The CRA has the tools, data and mandate; it simply hasn't acted. By dedicating a small, focused team and imposing meaningful penalties, Canada could recover $1 billion to $2 billion every year while restoring confidence in our institution. We owe it to legitimate carriers and every taxpayer to ensure honesty is rewarded, not punished—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Mitton. Unfortunately, I am going to have to cut you off to make sure that everybody has a chance to ask you questions. You can submit that electronically. We'll include it in our testimony, and the analysts will be very happy to review it when we're compiling our report.

Thank you very much for your opening remarks.

We'll begin our line of questioning with Mr. Lawrence.

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

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Thank you very much.

My questions will be for you, Mr. Kotak. I want to walk through the distinction between an independent contractor and an employee, because I don't know if we've been the most clear in terms of explaining the difference.

When an individual or a corporation.... I'll start with a person. An individual has the ability to decide whether they're going to be an independent contractor or an employee. That being said, there are certain safeguards in place whereby the CRA or otherwise may deem a contract to be that of either an independent contractor or an employee. That is completely valid and legal, so the incorporation of an individual in the right circumstances to become a business is legal and allowed. Where the concern starts, for me at least, is that people are being taken advantage of.

Could you, Mr. Kotak, explain to me why an employer might want to use their greater position of power to encourage, perhaps, someone who is not as sophisticated to go ahead and incorporate, as opposed to being an employee?

[Ritesh Kotak]

Thank you, Mr. Lawrence, for your question.

There are multiple reasons. Obviously, I think the first one is around the fact that it's cheaper. It's definitely cheaper when it comes to taxes, CPP, EI, vacation pay, minimum wage laws and providing benefits. It's estimated to be around 30% difference, so if you're a business, there's potentially a 30% savings there if you go with the incorporation model.

There's another component to this as well. This is some of the stuff I've had to deal with—fortunately or unfortunately, depending on which way you look at it—and that is terminations, when you're actually leaving employment. There are a lot of rules around termination, whether it's the Employment Standards Act or whatever. I'm speaking, obviously, as a licensed lawyer in Ontario. I understand that it varies from province to province, but the basics are the same. When you circumvent the system and terminate an independent contractor versus meeting the threshold of having 25-plus employees, the $2.5-million payroll, where there may be potentially additional severance owed, and common-law notice periods, all those things go out the window when it's an independent contractor versus an employee, so you're using the system to circumvent those protection mechanisms that may be in place.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Thank you.

You could certainly envision, I believe, an employee being convinced to become an independent contractor, because they might save marginally on making CPP contributions and even delaying the paying of the tax, but a lot of the benefits that they would accrue from being an employee would actually come afterwards. If you're not an employment expert and if you're not sophisticated, you may not know that by becoming an independent contractor, you no longer participate in the EI system, so if you get fired, as you said, you may not get protections, such as common-law damages. You're not paying for CPP, so you can imagine a situation where someone is disabled and then they don't get those disability benefits from CPP. They could even work for 30 years and think they're getting CPP, but they're not.

Could you see that situation playing out, sir?