An owner-operator who hauls only for you may not be an employee. That does not make them an ordinary contractor either — and the statutory definition of the middle category names truck owner-operators first.
Key takeaways
If an owner-operator hauls exclusively or near-exclusively for you, the relationship may sit in a middle category that Canadian law recognises and most carriers do not plan for. Federally it is a defined term. The Canada Labour Code’s definition of a dependent contractor begins with the owner, purchaser or lessee of a vehicle used for hauling — other than on rails or tracks — livestock, liquids, goods, merchandise or other materials, who is party to a contract under which they are required to provide the vehicle and operate it in accordance with the contract, and are entitled to keep whatever remains after their costs of performance are deducted from what they are paid.
Read that twice. The drafter was describing an owner-operator. This is not a category trucking fell into by accident; it is the category trucking was the model for.
The provincial and common-law version arrives from a different direction. As Treadstone Law explains in its guide to dependent contractors in Ontario, Ontario and Canadian courts have long recognised that the employee-versus-independent-contractor divide does not capture every real working relationship, and that a worker who is not an employee in the formal sense can still carry some of the legal protections normally associated with employment — particularly around how the relationship can be ended.
So there are two routes to the same practical problem: a statutory definition federally, and a judge-made category in the provinces. A carrier with interprovincial work can be exposed to both.
The vehicle limb is not the only one. The same Code definition also catches any other person who, whether or not employed under a contract of employment, performs work or services for another person on such terms and conditions that they are, in relation to that other person, in a position of economic dependence on, and under an obligation to perform duties for, that other person.
That limb matters for arrangements a carrier might not think of as owner-operator work at all — a leased-on driver using a truck you supply, a dedicated courier running one route, a yard hostler engaged through a numbered company. The question is not what the equipment arrangement is. It is whether the person could walk away and still have a business.
Two things, and they arrive at different times.
What does not change is the safety and compliance picture. The hours of service regulations bind the motor carrier regardless of the commercial relationship, and the provincial inspection obligations follow the operator of the vehicle. Dependency is a labour and contract question sitting on top of a compliance structure that was never affected by it.
Nobody sets out to create a dependent contractor. It happens by accumulation, usually over years, and each individual step is commercially sensible. These are the accumulating facts:
Worked example: the annual review that changed one clause
A carrier in southwestern Ontario had six owner-operators. Four ran mixed freight from the load board and the carrier’s own customers, and had other customers of their own. Two ran dedicated lanes for a single shipper, had done so for years, and had no other work.
The owner had treated all six identically: the same agreement, the same settlement structure, the same termination language. When the arrangement with one of the dedicated operators had to end, the difference between the two groups became the only thing that mattered.
The review that followed was not complicated. For each operator the carrier recorded three facts annually: the share of their gross revenue that came from the carrier, whether they had hauled for anyone else in the past twelve months, and whether the carrier or the operator held the customer relationship. The two dedicated operators scored the same way on all three.
The carrier did not restructure the relationships — the dedicated lanes were valuable and the operators wanted them. It changed one thing: the termination terms for those two agreements were rewritten with legal advice, on the assumption that the dependent contractor category applied. That is a cheaper answer than pretending the category does not exist, and it left the commercial arrangement intact.
Three things carriers reach for that do not work on their own. A clause stating that the parties intend an independent contractor relationship — helpful evidence, not an answer, as Treadstone Law’s guide to contractor agreements sets out. A requirement that the operator incorporate — a fact about their structure, not about the relationship. And an instruction to invoice with HST — a tax consequence of the classification, not a cause of it.
Federally there is a fourth that fails for a simpler reason. The Code prohibits an employer from treating an employee as if they were not their employee, which forecloses the drafting route entirely where the person is in fact an employee.
The workable position for most small carriers is not to eliminate the category but to know which of their relationships sit in it and price the exit accordingly. Practically: record the three exclusivity facts annually; get the termination terms in the dedicated agreements drafted on the assumption the category applies; and separate the operators who are genuinely running their own businesses from the ones who are running yours. Treadstone Law’s note on enforceable termination clauses covers the drafting side.
It weakens the dependence argument, and how much depends on scale. One occasional backhaul against a full-time dedicated lane will not change the picture; a genuine second customer taking a material share of the operator’s revenue might. The Code’s economic dependence limb is about a position of economic dependence, which is a question of degree.
Not by virtue of the category alone — that is the distinction between a dependent contractor and an employee. Statutory employment standards entitlements follow employee status. What the dependent contractor category primarily carries is protection around how the relationship ends, which is the point Treadstone Law makes.
Only if you are a federal work, undertaking or business — which the Code defines to include one connecting any province with any other province, or extending beyond the limits of a province. A purely intraprovincial carrier is provincially regulated, and the dependent contractor question reaches it through the common-law route rather than the statutory one. The practical exposure at termination is similar.
Sometimes, and it is worth costing rather than assuming. Converting changes withholding, coverage, hours-of-work rules and equipment economics all at once. The classification analysis in is your driver an employee or a contractor is the place to start, because a conversion decision made on the wrong facts is expensive in both directions.
A short call is enough to review your dedicated arrangements and tell you where the exit terms need rewriting.
