Canadian Trucking Alliance CTA

CTA Comments Canada Labour Code Review

February 2018

Canadian Trucking Alliance 555 Dixon Road, Toronto, ON M9W 1H8 Tel: 416-249-7401 – email: [email protected] Follow us on Twitter @cantruck and on the internet at www.cantruck.ca Introduction

Promoting good quality jobs for Canadians is a core mandate of the Minister of Employment, Workforce Development and Labour. As workplaces and the nature of work evolves, it is important that federal labour standards are also reviewed and updated a necessary. As a result, the Minister has launched a review of key elements of the Canada Labour Code (such as hours of work, wages, leaves and holidays). The Canadian Trucking Alliance (CTA) is pleased to provide input into this review. Background

The following provides key relevant background on the trucking industry: • Employment- The trucking industry employs about 400,000 Canadians in a variety of occupations. Of this, commercial vehicle operators represent the largest single cohort. Moreover, the characteristics of vehicle operator occupation are quite unique compared to those of most other occupations in both the trucking industry and the federal workforce overall. The vehicle operator occupation does not fit easily into the traditional 9 to 5/stationary work scenario. It is for that reason, CTA will focus its comments on commercial vehicle operators.

• Driver Shortage & Demographics- According to a 2016 study conducted by the consulting firm CPCS, the Canadian for-hire trucking industry is facing a long-term, chronic driver shortage that could reach 48,000 by 2024. The demand for truck drivers will continue to increase, while supply is shrinking. There are many reasons for this, not the least of which is that the industry is at the precipice of a demographic cliff, reflecting a workforce that is older and aging more rapidly than the total Canadian workforce and a paucity of younger people seeking to enter the occupation.

• Driver Compensation- Levels of compensation in every sector are driven by the market, by supply and demand. This is also true in trucking. The driver shortage is reflected in upward pressure on wages in many markets. Trucking companies must compete for labour not only amongst themselves but with other sectors. Notwithstanding, truck driving is a high wage occupation. Currently, truck drivers in Canada make on average the equivalent (since most are paid by the mile or a combination of miles and hours) of over $20 per hour which well over the national individual median wage. Long distance drivers, for example, can typically make $70,000 to $80,000 a year. Drivers operating special trucks and trailers and/or handle special commodities can earn even more. Those that prefer shorter or more regular routes, less away time, fewer hours etc., can make wages in a broad range from $40,000 to $70,000.

• Industry Structure and Why It’s Important- The structure of the trucking industry is also quite different and unique compared to most other federally-regulated sectors which are typically highly concentrated with a relatively few, mostly large-sized companies.

1 Trucking is a low-margin, hyper-competitive sector dominated by thousands of small, many family-owned, establishments. Even a spate of mergers and acquisitions in recent years has had little impact on increasing the level of industrial concentration. Trucking is not a homogeneous industry; it is fragmented not only by size but by the type of commodities transported, the type of equipment deployed, and the regions and markets served. Trucking is also an industry which physically crosses borders. All this needs to be considered when reviewing federal labour standards. A one size fits all approach for all federally-regulated employers is highly problematic. Key Federal Labour Standards Under Review

CTA provides comments on each of the following Federal Labour standards: • Hours of Work- The trucking industry is subject to two sets of standards governing vehicle operator hours of work: (1) The Canada Labour Code administered by ESDC; and (2) the federal hours of service regulations administered by Transport Canada. The latter prescribe when and for how long a driver can drive or be on-duty, take breaks, rest, reset the clock, etc., and were designed to balance productivity with fatigue management principles. In this sense, there are few comparable occupations in the other federally-regulated sectors with such tight parameters on an employee’s hours of work. The hours of service regulations are deeply entrenched in the fabric of our industry and are themselves the product of nearly a decade of negotiations. Taken together, the restriction on the hours of work for commercial vehicle operators is well defined and thoroughly accepted by the industry. Furthermore, now that Transport Canada has initiated the Gazette process for the mandating of Electronic Logging Devices (ELDs) CTA expects that when the process is complete any cheating that may exist under the paper log-book regime will be dramatically reduced and the rules governing commercial vehicle hours of service will be as clear and consistently enforced as they have ever been.

• Overtime- The regulation of overtime for truck drivers – how and when it must be paid, reconciling productivity-based pay vs an hourly-based regulation, different forms of payment for different types of work, defining city vs highway drivers, etc. – is a long- standing topic of discussion in the trucking industry. In turn, ESDC has traditionally enforced the rules on a complaint driven basis. Over time is has become evident the rules are not clear to many carriers and the industry’s pay systems do not easily lend themselves to consistent enforcement. Both the Canadian Trucking Alliance (CTA) and Employment and Social Development Canada (ESDC) recognize this is likely a contributing factor to non-compliance. In the Commissioner’s Report, Arthurs lays a good deal of the blame for Part III noncompliance on what he calls the “impenetrable language” found in much of Part III. To begin to address this issue, in 2016 CTA formed a Carrier Committee on Overtime – comprised of trucking executives from across the country – and in March 2017 CTA submitted a document to ESDC outlining

2 where carriers believed further guidance is needed. Since that time, ESDC and CTA have continued to collaborate on developing guidance material for industry. When this process is complete, CTA expects we will have much more clarity and consistency nationally on the calculation of overtime in our sector. This process in our view has been an excellent example of industry-government collaboration and CTA does not see the need for added intervention on this topic. • Flex-Time- The industry recognizes issues pertaining to lifestyle (e.g., time away from home) and work-life balance can be a challenge as it pertains to recruiting new drivers. However, it is equally true that many if not most existing drivers do not want a reduction in hours. The federal hours of service regulations by their very nature restrict the flexibility available for drivers/employers, at least while “on shift.” Nevertheless, industry employers do offer their drivers a variety of flex-work arrangements, though not all forms of flexibility are practical -- working from home. Typically, flex-time in trucking means extended time-off at the end of a ‘run’; route planning and optimization (companies are investing heavily in GPS and other systems to help better position drivers to get them home more often and/or time off to deal with personal/family matters, etc.). There is much more flexibility in this regard than the industry is given credit for. Quite simply, trucking companies must do this if they want to attract and keep drivers as driving skills are easily transferable and drivers will and do gravitate to companies who they feel will best accommodate their needs. This is especially so with the current shortage of drivers. There is an expression often used in the industry: “the company that has the drivers wins.” In our view, the market is responding appropriately without legislation.

• Employee/Contractor Status- A person providing driving services to a company is either an employee or a contractor (commonly known as an owner-operator in trucking). Employees can work for trucking companies, or an owner-operator, or a driver agency. Owner-operators are typically one-person/one-truck operations (owned by the driver) that operate as a small independent business that may be incorporated or not and that may contract with one or more carriers. They are not subject to the Canada Labour Code, employee payroll tax deductions, etc. While there have from time-to-time been disputes over whether a driver is an employee or an owner-operator, generally-speaking if the driver owns his/her own vehicle he/she is considered an owner-operator. During the Commission consultations for the Arthurs’ report, CTA maintained that Part III should not attempt to define an employee or independent contractor, arguing carriers and owner-operators should be given the scope to set out their business relationship in a written contract and that owner-operators as independent contractors should continue to be excluded from Part III coverage. CTA maintains this position. As Arthurs’ himself noted in his report, this is a point both management and independent contractors agree on in our sector.

3 • So-Called Independent Drivers- Different from the previous discussion on contractor status, a trend has emerged where some trucking companies are engaging “independent drivers” either directly or through driver agencies. These individuals solely provide driving services. They do not own their own vehicle. The driver has none of the protections of an employee, nor do they have the responsibilities of an employee (e.g., declare all income for tax purposes, pay CPP, EI, etc.). The companies that utilize these individuals avoid the responsibilities of an employer – payroll taxes and deductions, workers compensation, overtime, etc. This practice, which is referred to as the ‘Driver Inc’ model, allows these companies to undercut the marketplace and gain market share over legitimate and compliant companies. CTA has approached the Canada Revenue Agency on this issue and is willing to work with ESDC as well.

• Occupational Health & Safety- Safety of our employees and the motoring public with whom we share the road in the trucking industry’s paramount concern. Because of the nature of the work, trucking employers must be ever vigilant when it comes to its workers workplace and on-road safety. This includes a heightened responsibility to monitor our drivers’ safety performance and fitness for duty. There are few occupations in the federal sphere that would be more safety-sensitive. This also means that employers need the ability to terminate employees who are unsafe on public roadways. While CTA respects workers’ rights are extremely important and that unjust dismissal provisions are necessary in some circumstances, we oppose measures that would force carriers to keep unsafe drivers on the road.

• Legalization of Marijuana- CTA believes the legalization of marijuana will have a significant impact on workplace safety and fitness for duty for truck drivers inour sector. Employers, but especially those with workers in safety sensitive positions like those in the trucking industry, need the support of the federal government to ensure a safe workplace for all our workers and for the public at-large. The responsibility to manage this risk – at a zero-tolerance level – is being downloaded onto employers. It is therefore imperative that employers be allowed to apply workplace measures that will enable them to mitigate that risk. This includes a Canadian regulatory framework (similar to that which exists in the United States and which Canadian trucking companies and drivers who cross the border have complied with for over 20 years) for comprehensive workplace drug and alcohol testing, including and especially random testing. The Government of Canada cannot expect employers to adequately manage the risk drug and alcohol use poses without the ability to randomly test workers in safety-sensitive positions. It is contradictory, for the Government of Canada to be considering without-cause roadside tests for impairment by alcohol – which is in effect random testing – and at the same time deny employers the ability to conduct random tests of workers in safety-sensitive positions. This is a workplace safety issue every bit as much as a public safety issues and ESDC should stand with employers on this.

4 • Equal Pay (Full-Time vs. Part-Time/Seasonal Workers- In some provinces, such as Ontario, part-time, casual, temporary and seasonal employees performing the same job as full-time employees are required to be paid equal to full-time employees. CTA understands the federal government may be considering similar provisions in the federal sector. While CTA is not inherently opposed to this provision, it must be structured properly with clear exceptions. For example, as is the case in Ontario, an exception should apply where a wage difference is based on (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) other factors justifying the difference on objective grounds. In the trucking industry, it is common for carriers to offer different mileage rates to different workers based on their tenure with the company, their safety record, total miles driven, their on-road performance amongst a host of other considerations. This practice is well defined in our industry, widely accepted by employers and employees, and clearly checks the necessary considerations for exemption.

• Minimum Wage- CTA acknowledges a healthy economy is built by a workforce that is paid a fair living wage, which in turn, allows all Canadians to drive demand for products and services. As stated earlier, truck driving is a high wage occupation so few if any would be impacted by a federal minimum wage, depending of course where it would be set, and the adjustment period granted to employers. Overall, CTA sees little need for a federal minimum wage and plenty of potentially negative economic consequences were one to be introduced at the federal level.

Conclusion

Part III of the Canada Labour Code is meant to establish minimum workplace standards in the federally-regulated private sector. It is also meant to reflect a practical balance between labour interests and employer responsibilities. It cannot possibly define the ‘ideal’ situation for everyone. CTA appreciates that modernizing labour legislation is a challenging task. We also appreciate that the status quo needs to be reviewed periodically and that decisions need to be made. However, we ask that the review process not be rushed, that it fully accounts for the differing realties and potential solutions in different economic sectors. CTA also respectfully reminds ESDC that in their previous review of the Labour Code, the Commissioner cautioned that “federal policy makers should be cautious about adopting labour standards that impose significant costs on employers without the prospect of providing corresponding productivity gains.” We believe this holds true today and that an evidence-based approach is needed, and a comprehensive case should be made for all proposed changes to Code. Finally, we request that any amendments to the Canada Labour Code be shared with CTA before they are officially proposed so that we can consult again with our members and provide meaningful feedback.

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