Independent Contractor or Company Driver? Beware of the scam

Let your fellow drivers know, who's good to work for, who's bad and who to stay away from.
Name them. Don't let the bad or the rip off artists get away with fleecing drivers.

Independent Contractor or Company Driver? Beware of the scam

Postby snafu » Mon Aug 18, 2014 11:18 am

It's something too many are using to lure unsuspecting drivers into thinking they will make more money as an independent contractor driving a truck for them and paying less in tax than what they would as employed as a company driver.

Sounds good right? Except it is illegal and the Canadian Revenue Agency will tell you this if you call them.
Oh and well, whatever pay rate they typically offer, once you've factored in all the costs that YOU will be responsible for, it's substantially less than what you'd make as an employee.




What is the difference between an employee and an independent contractor, and why does it matter?
In employment law, the determination of employee or contractor status determines which laws protect and govern the worker in question. Therefore, this determination of status is crucial.
If a person is an employee, s/he:is afforded employment protection under both the common law and employment legislation, which covers things like minimum wage, holidays, overtime, termination, and notice (if applicable) is covered by workers’ compensation legislation without having to pay premiums himself/herself generally has an exclusive, and sometimes long-term, relationship with the payer will have income tax, Canada Pension Plan, and Employment Insurance payments deducted from his/her pay cheque and remitted on his/her behalf (rather than having to remit them himself/herself) may have employer-paid benefits such as health care, sick leave, pension plan, professional development, parking, and gym membership cannot claim tax benefits, for example, deductions for work-related expenses
If a person is a contractor, s/he:is considered self-employed and therefore is not covered by most employment protection under both the common law and employment legislation may have to arrange and pay for his/her own work-related accident compensation is free to provide his/her services to other organizations does not have statutory deductions applied to his/her pay and must provide his/her own tax, Canada Pension Plan, and Employment Insurance payments to the government, as well as paying for his/her own additional benefit can claim most reasonable business expenses as deductions on his/her yearly income tax returns


I have a person doing some work for me, but I do not want him to be considered an employee. I signed a contract that says he is an independent contractor. Doesn’t that mean that he is?
No. Written contracts are useful as a guide in determining whether you have an employer/employee or payer/contractor relationship. However, the essence of the relationship is the determining factor, regardless of what appears in the contract.
Just because a person is labeled an independent contractor does not mean that s/he is one. In order to be an independent contractor, the person must meet the criteria that have been developed at common law.
How can I know if I am (or my worker is) an employee or an independent contractor? What are the common law tests?
Common law tests developed by the courts and various tribunals determine who is an employee and who is an independent contractor.
In general, the tests look at these five factors:
control
ownership of tools
chance of profit/risk of loss
integration
payment


http://www.law-faqs.org/wiki/index.php/ ... ontractors
User avatar
snafu
 
Posts: 24
Joined: Fri Aug 15, 2014 4:11 pm

Re: Independent Contractor or Company Driver? Beware of the

Postby snafu » Thu Aug 28, 2014 10:40 am



A couple of cases just released by the federal tax court show the courts are still applying a classic legal test to determine whether a trucker is an employee or a “independent contractor.”

Employee drivers get benefits like severance pay, pensions and unemployment benefits, plus their employer is obliged to withhold income tax and CPP on their earnings.

But those who engage “independent contractor” drivers can sever the business relationship at any time, plus the drivers themselves get to deduct their operating expenses from their income.

When tax court judges need to figure out whether a driver is an employee or an independent contractor, they don’t look at the way the parties have written up their deal – they look at the actual relationship between the payer and payee.

Judges usually look back to a 1986 Federal Court of Appeal case, where Wiebe Door Services Ltd., an industrial door company, claimed its installer/repairmen were independent contractors, and therefore not liable for CPP and unemployment insurance withholdings.

The revenue minister argued the installers were employees.

The court at that time created a four-part test to determine whether an “employment” relationship exists:

The degree or absence of control, exercised by the alleged employer;

Ownership of tools;

Chance of profit and/or risk of loss;

The degree of “integration” of the alleged employee’s work into the alleged employer’s business.

This was the classic test (it’s called the “Wiebe Door” test) that got applied last August 19 (2003) when Mississauga, Ont.-based Lyte Enterprises Inc. claimed a dozen of its truckers were independent contractors.

The minister of national revenue begged to differ and said they were employees.

Lyte went to the tax court for a ruling.

The drivers hauled freight for Lyte’s clients across the U.S. and Canada.

They drove trucks owned by the company.

The drivers needed to have both experience and an AZ licence, plus they had to keep logbooks.

They reported to Lyte when a load was delivered, or to obtain new assignments. The company provided drivers with pagers and they were required to deliver their loads within time frames determined by Lyte.

Lyte’s name and authority numbers appeared on the trucks. The drivers were paid on a per-mile basis, but trucking costs, including repairs, maintenance, fuel, insurance, road and bridge tolls were all paid by Lyte.

Lyte also offered drivers medical, dental and life insurance plans.

Toronto Tax Court Deputy Judge William E. MacLatchy applied the four-part test and agreed with the minister – the drivers were employees.

While Lyte didn’t actually “control” its drivers (in the sense of supervising them), their job was to deliver Lyte’s customers’ goods and the company would provide all the custom forms and declarations, manifests and bills of lading – whatever was required by the driver to deliver the load.

The dispatcher’s time limits had to be obeyed and drivers had to call in once deliveries were done. If they came back empty they wouldn’t get paid.

Lyte also owned the “tools” – in this case the trucks – and covered all their expenses. This clearly “pointed to an employer-employee relationship,” MacLatchy said.

The drivers did have a “chance of a profit” – but the only way a driver could increase his income was to drive more miles, and that, said MacLatchy, was “not profit in the true entrepreneurial sense.”

Drivers could take a longer route to the destination but they wouldn’t be paid the extra mileage so had little incentive to do so.

And even though drivers were responsible for their own meals and other personal comforts, “these items cannot be considered as an entrepreneurial loss,” said MacLatchy.

As for the degree of “integration,” it wasn’t enough that all the drivers had signed an acknowledgment that they were independent contractors.

A driver couldn’t approach Lyte and say he had a trucking business and that he’d take Lyte’s business deliveries on as his own business, MacLatchy said.

All these factors pointed to an employer/employee relationship.

http://www.trucknews.com/features/emplo ... contractor
User avatar
snafu
 
Posts: 24
Joined: Fri Aug 15, 2014 4:11 pm

Re: Independent Contractor or Company Driver? Beware of the

Postby The Kurgan » Tue Sep 09, 2014 9:14 pm

I took a tour of the new Sysco terminal at Woodstock and was surprised to hear all their drivers are Owner Ops. I was told they don't own any trucks there. Guy told me if I wanted to drive for them I'd have to go buy a truck...no thanks.
The Kurgan
 
Posts: 4
Joined: Mon Aug 18, 2014 1:04 pm


Return to Carrier Spotlight, The Good Bad and the Ugly

Who is online

Users browsing this forum: No registered users and 12 guests

cron