Every carrier that runs payroll by the book has lost a bid to someone whose numbers didn’t add up. Often the gap is how the drivers are paid. “Driver Inc.” is the name for a set-up where drivers who work like employees are told to incorporate and are paid as contractors, so no one deducts their Canada Pension Plan and Employment Insurance contributions or pays their vacation and overtime.
This insight sets out what the federal government has done about it since 2024, where the money is going and what it means for carriers, owner-operators and drivers in BC. For the rest of the rules a BC truck and its driver work under, from CVI inspections to hours of service, start at our compliance centre.
What the government means by Driver Inc.
Employment and Social Development Canada (ESDC), whose Labour Program enforces the Canada Labour Code, puts it plainly: “Misclassification is when an employee is wrongfully classified as an independent contractor.”1 In its briefing for the House transport committee in October 2025, the department described the Driver Inc. model as drivers who “register as an incorporated entity and offer their driving services as independent contractors.”4
The scale is not small. In February 2026 ESDC estimated about 31,800 incorporated self-employed truck drivers without employees in the federally regulated road transportation industry.3 Not all of them are misclassified: a real owner-operator with their own truck and customers is a business. The question is whether the relationship looks like a business or a job.
What a misclassified driver loses
ESDC lists what a federally regulated employee is entitled to and a misclassified driver goes without: up to 4 weeks of paid vacation a year, 10 paid general holidays, 3 paid days of personal leave, up to 10 paid days of medical leave a year, overtime pay and protection against unjust dismissal.1
What the law says now
The Canada Labour Code has prohibited misclassification since 2021. Amendments that received Royal Assent on June 20, 2024 went further. Section 167.1 now reads: “An employer is prohibited from treating an employee as if they were not their employee.” Section 167.2 puts the burden of proof on the employer: if an employer says a person isn’t their employee, the employer has to prove it.24
Misclassification is a Type C violation under the Code’s penalty regulations. The baseline penalty is $1,000 for an individual and $12,000 for a large business, doubles for an employer with a history of non-compliance, and each day a violation continues counts as a separate violation.9
Federal or provincial?
The Canada Labour Code covers federally regulated trucking: in general, carriers whose trucks cross provincial boundaries or the Canada–US border. Transport Canada’s briefing is explicit that ESDC’s mandate is limited to federally regulated operations, and that provinces apply their own labour laws to trucking that stays inside one province.8
So a carrier running Surrey to Calgary or Seattle generally answers to the Code; one running only inside BC answers to BC’s labour laws. The tax side is different: the CRA applies the same tax rules to every carrier, wherever it runs.8
The money behind the crackdown
The figure in the headlines comes from Budget 2025, tabled November 4, 2025. It proposed $77 million over four years starting in 2026-27, with ongoing funding of $19.2 million a year, for the Canada Revenue Agency to run a program on personal services businesses and to lift the moratorium on reporting fees for services in trucking.5 The budget’s own table expects the measure to bring in about $40 million a year in revenue from 2026-27, more than it costs.5
$19.2M
a year, ongoing, for the CRA from 2026-27
$77M
over the first four years
$26.3M
invested in 2023 for the Labour Program’s enforcement
The CRA moved first. On December 4, 2025 it lifted a moratorium dating from 2011: from the 2025 tax year, a trucking business that pays more than $500 in a year to a driver’s corporation must report it in box 048 of a T4A slip, or face penalties.6 The Labour Program and the CRA have shared information under an agreement since March 2025,4 and a 2026 amendment to the Income Tax Act now lets the CRA give taxpayer information to ESDC for enforcing the Code’s misclassification rules.7
Enforcement so far
ESDC’s February 2026 figures cover the Labour Program’s work over the previous two years:3
890+
employers inspected
983+
payment orders, April 2024 to February 2026
$5.9M
in unpaid wages and related amounts ordered
Driver Inc.: the timeline
Misclassification banned in the Canada Labour Code
The first version of the prohibition in Part III of the Code.4
The Labour Program’s misclassification inspections begin
Funded by the $26.3 million announced in the 2022 Fall Economic Statement.4
Employees unless proven otherwise
Amendments put the burden of proof on the employer.2
ESDC and the CRA start sharing information
An information-sharing agreement between the Labour Program and the CRA.4
Budget 2025
$77 million over four years, then $19.2 million a year, for the CRA.5
T4A penalties back on
Fees paid to drivers’ corporations must be reported from the 2025 tax year.6
Provinces join in
Federal, provincial and territorial labour ministers set up a working group on misclassification in trucking.10
- Today, Oct 7, 2026
The working group reports back
Ministers asked for a progress report in the fall of 2026.10
Sources: Canada Labour Code; ESDC; Budget 2025; CRA. Checked October 5, 2026.
What it means for you
If you run a carrier
If your drivers work your schedule, in your trucks, on your freight, assume the Code and the CRA will treat them as employees, and that the burden is on you to show otherwise. The T4A reporting rule means payments to drivers’ corporations are now visible to the CRA. A temporary foreign worker hired through a positive Labour Market Impact Assessment can’t be put on a contract either: ESDC says such a worker “cannot incorporate or self-employ to work as a truck driver” for that company.4
If you’re an owner-operator
A genuine owner-operator runs a business: their own truck, their own costs, their own customers. The CRA decides employee or self-employed on the whole relationship, and its guide lists the factors it weighs. Run through them for your own set-up; ticks stay in your browser.11
The questions the CRA weighs
From the CRA’s guide RC4110. More ticks lean toward a business of your own; the CRA looks at the whole picture, not a score.
6 items to check.
Sources checked 5 Oct 2026. The official sources govern; check them before you rely on a row.
In BC, WorkSafeBC makes its own call on whether a driver is a worker it covers or an independent operator, under its directive on workplace status.12 If you’re buying your own truck to go independent, our guide to buying a used semi truck in BC covers the equipment side, and financing a first truck covers how owner-operators pay for one.
If you’re a driver
If a carrier wants you to incorporate to drive its truck, on its schedule and its freight, ask why. ESDC says misclassified employees can be owed back pay and benefits, and the Labour Program takes complaints and reports of misclassification from federally regulated drivers by phone, by email or online.1 A driver who works only inside BC is covered by BC’s employment standards instead.8
FAQ
Driver Inc. questions
Is the $19.2 million real?
Yes. Budget 2025 (Chapter 3) proposes $77 million over four years starting in 2026-27, with ongoing funding of $19.2 million a year, for the Canada Revenue Agency to act on misclassification in trucking. It is CRA funding, not money for the Labour Program’s inspectors, who were funded separately with $26.3 million in 2023.
Does the Canada Labour Code apply to my trucking company?
If your trucks cross provincial boundaries or the Canada–US border, generally yes: that is federally regulated trucking. A carrier that runs only inside BC falls under BC’s labour laws. The tax rules apply either way.
I’m an owner-operator with my own truck. Is this aimed at me?
Not if you really run a business: your own truck and costs, your own customers, and the freedom to take or turn down work. The CRA and the Labour Program look at the whole relationship, and since June 2024 the employer has to prove a worker isn’t an employee.
What penalties can an employer face?
Under the Code’s penalty regulations misclassification is a Type C violation: a baseline of $1,000 for an individual up to $12,000 for a large business, doubled for repeat non-compliance, with each day counting as a separate violation. Payment orders for unpaid wages and public naming are also used.