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.