Federal Post
Federal Inspection Blitz Targets Driver Misclassification in GTA Trucking Industry
Date: December 3, 2025
On December 1, 2025, the Federal Government announced that it will conduct an inspection blitz in Hamilton and the Greater Toronto Area (GTA) in the coming weeks aimed at identifying and penalizing federally regulated trucking companies that misclassify employees as independent contractors — a practice often referred to in the industry as the “Driver Inc.” model.
Overview
The blitz will focus on companies suspected of violating worker classification rules under the Canada Labour Code (Code). When misclassification is identified, the Labour Program, a federal institution that is part of Employment and Social Development Canada, will conduct full investigations and issue penalties for violations.
Worker misclassification occurs when individuals who should be classified as employees are instead treated as independent contractors. This practice is prohibited under federal labour standards and deprives workers of statutory entitlements including minimum wage, paid leaves, and occupational health and safety protections. Misclassified workers also lose access to Employment Insurance (EI) and Canada Pension Plan (CPP) benefits.
Information Sharing and Enforcement Coordination
Data collected during the blitz will be shared with the Canada Revenue Agency (CRA) to support coordinated enforcement actions. The Labour Program already collaborates with the CRA and provincial partners on joint operations and inspections in the road transportation sector.
Budget 2025 provides for expanded information sharing between the CRA and Labour Program, plus additional measures to strengthen compliance from a tax perspective, including:
- increased funding beginning in 2026-2027 for a new CRA program addressing non-compliance related to personal services businesses
- lifting the moratorium on reporting fees for services in the trucking industry, where misclassification is particularly common
Presumption of Employee Status
Under the amendments to the Code that came into force on June 21, 2024, there is now a presumption that workers who receive payment from an employer for work performed are employees unless the employer can prove otherwise. This represents a significant shift in the burden of proof.
The employer bears the responsibility to provide evidence demonstrating that a worker is an independent contractor, rather than the worker having to prove employee status. If an employer claims a worker is not an employee, they must provide convincing proof such as facts, documents, or explanations to the Labour Program to support their position.
How the Labour Program Determines Employment Status
When assessing whether a worker is properly classified, the Labour Program follows the guidance established by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.
The central question is:
“Is the person performing services as a person in business on their own account?”
The analysis examines the total relationship between the parties, with no single factor being determinative.
Key factors include:
- control: the level of control the employer has over the worker’s activities, including the right to direct how work is performed
- ownership of tools: whether the worker provides their own equipment and the extent of investment in those tools
- chance of profit and risk of loss: whether the worker has financial investment in the business and faces genuine financial risk
- integration: whether the work is performed as an integral part of the employer’s business or is merely accessory to it (examined from the worker’s perspective)
Additional considerations include whether the worker can hire helpers, contract work to others, provide services to multiple clients, has to report to the worksite daily, and the manner of payment and termination.
Characteristics Distinguishing Employees from Independent Contractors
Indicators of employee status typically include:
- working exclusively for one payer
- payer provides tools and equipment
- payer controls duties and sets working hours
- worker must personally perform services
- payer provides benefits, pension, and vacation pay
- worker is paid salary or hourly wage
- worker reports to payer’s workplace regularly
Indicators of independent contractor status typically include:
- working for multiple clients
- providing own tools and equipment
- deciding how tasks are completed
- setting own working hours
- ability to hire helpers or subcontract work
- not participating in payer’s benefit plans
- no vacation pay or restrictions on hours
- paying own expenses
- being paid by the job and submitting invoices
- ability to accept or reject work
Implications for Employers
Misclassification of independent contractors can expose employers to multiple risks, including:
- Labour Program penalties: administrative monetary penalties or prosecution under the Code
- payroll tax liability: potential liability for failing to withhold and remit income tax, CPP contributions, and EI premiums
- retroactive statutory entitlements: owing back pay for minimum wage violations, vacation pay, overtime, and other statutory entitlements
- health and safety violations: liability for failing to provide occupational health and safety protections
Federally regulated trucking companies in Hamilton and the GTA should review their worker classification practices immediately to ensure compliance with federal labour standards.
If you have any questions about worker misclassification or need assistance during the inspection blitz, please contact your Hicks Morley lawyer.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©