December 1, 2025
On December 1, 2025, the Government of Canada announced that federal inspectors will be carrying out a focused enforcement initiative in Hamilton and the Greater Toronto Area to address ongoing concerns about the improper classification of drivers in the trucking industry. This initiative is directed at federally regulated carriers suspected of designating workers as “independent contractors” when they are, in substance, employees.
Scope of the Enforcement Initiative
The inspections will be conducted under the Canada Labour Code and will concentrate on organizations believed to be using contractor arrangements that do not comply with federal labour standards. Where misclassification is suspected, the Labour Program will escalate matters to full investigations and impose appropriate penalties.
Information collected during this initiative will also be provided to the Canada Revenue Agency (CRA). This increased information sharing is consistent with measures introduced in the 2025 Budget, which expanded coordination between the Labour Program and the CRA to strengthen tax compliance, particularly in sectors where misclassification is prevalent.
Understanding Worker Misclassification
Worker misclassification occurs when an employer treats an individual as an independent contractor even though the nature of the working relationship reflects employee status. This can occur in circumstances such as:
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The worker does not control their schedule or routes.
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The worker must use company supplied equipment, including vehicles or trailers.
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The worker is not permitted to work for other organizations.
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The worker bears no financial risk and does not stand to profit beyond wages.
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The worker operates as an integrated part of the company’s operations, including use of company branding, uniforms, or marked equipment.
Amendments to the Canada Labour Code that took effect on June 21, 2024, significantly altered the evidentiary burden in these cases. Employers must now demonstrate that a worker is truly operating as an independent contractor. (Workers are no longer required to prove they are employees).
Distinguishing Employees from Independent Contractors
The Labour Program considers the overall relationship between the parties. Indicators of employee status may include:
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Working solely for a single company
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Use of company-provided tools or equipment
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Employer control over daily duties and job performance
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Employer set work hours
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A requirement that the worker perform the work personally
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Participation in company benefit plans or receipt of vacation pay
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Regular attendance at the employer’s worksite
Indicators of independent contractor status may include:
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Maintaining multiple clients
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Supplying one’s own tools or equipment
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Autonomy over how the work is performed
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Establishing one’s own work hours
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Ability to subcontract or hire helpers
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Absence of employee benefits or vacation pay
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Responsibility for one’s own business expenses
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Being paid per project and issuing invoices
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Freedom to accept or decline work
Potential Consequences for Employers
Improperly classifying drivers can lead to several legal and financial consequences, including:
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Administrative monetary penalties or potential prosecution under the Canada Labour Code. These penalties range from $1,000 to $12,000 per violation, and potentially more if the company continues to misclassify workers. Companies that are found in violation of the Canada Labour Code will also be publicly named.
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Liability for unpaid income tax withholdings, CPP contributions, and EI premiums
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Retroactive payment of minimum wage, vacation pay, overtime, and other statutory entitlements
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Exposure to occupational health and safety violations for not providing protections owed to employees
What Canadian Trucking Companies Should Do Now
Federally regulated transportation companies, particularly those operating in Hamilton and the GTA, should take immediate steps to audit and confirm the accuracy of their contractor and employee classifications. Ensuring compliance before inspections begin will significantly reduce exposure to penalties and enforcement action. Companies that operate across Canada should be aware that evidence of violations that are found in this enforcement blitz will also be used and applied by the Labour Program nationally.
Hyde HR Law has over 30 years of experience providing specialized labour and employment advice and representation to the Canadian trucking industry. Our transportation clients include national and international trucking companies engaged in TL, LTL, intermodal, and car-haul activities. Our expertise also extends to serving clients in the aeronautics/airline industries.
We are not just legal professionals. The transportation labour and employment lawyers at Hyde HR Law have backgrounds in the transportation industry and bring to the table the kind of first-hand knowledge and experience that makes a difference in legal outcomes.
If you require assistance with worker classification, including review of current employment contracts, workplace policies and worker status, please do not hesitate to contact us for expert legal advice and guidance.
