Generic payroll gets two things wrong for a carrier: the overtime threshold and the pay basis. Both are fixed by federal regulation if your trucks cross a provincial boundary.
Key takeaways
If your trucks cross a provincial boundary, you are a federal work, undertaking or business, and your drivers’ hours and overtime come from Part III of the Canada Labour Code as modified by the Motor Vehicle Operators Hours of Work Regulations. Those regulations set standard hours of work for a highway motor vehicle operator that may not exceed 60 in a week, and for a city motor vehicle operator that may not exceed 9 in a day and 45 in a week. Payroll software configured for a provincial 40 or 44-hour threshold is answering a different question.
The Canada Labour Code’s definition of a federal work, undertaking or business includes a work or undertaking connecting one province with another or extending beyond the limits of a province. An interprovincial trucking operation falls inside that. A carrier operating wholly within one province is generally under that province’s employment standards regime instead — Treadstone Law sets out the Ontario overtime rules for the provincial case.
The line is drawn by the undertaking, not by the individual trip, and mixed operations are where the argument happens. It is a legal characterisation, and it is worth getting an opinion rather than a guess, because it decides your overtime threshold, your vacation entitlements and your holiday pay formula all at once.
The Motor Vehicle Operators Hours of Work Regulations modify sections 169 and 171 of the Code for three classes of employee working for an interprovincial carrier: bus operators, city motor vehicle operators and highway motor vehicle operators.
Overtime itself is unchanged: section 174 of the Code entitles an employee required or permitted to work overtime to be paid at not less than one and a half times the regular rate, or to be granted not less than one and a half hours of time off with pay for each overtime hour worked.
This is where carriers most often conflate systems. The regulations define “working hours” as all hours from the time an operator begins the shift required by the employer until relieved of job responsibilities — but expressly exclude time during a shift when the operator is relieved of responsibilities for authorized meals and rest while en route, time spent during stops en route due to illness or fatigue, time resting en route as one of two operators of a vehicle fitted with a sleeper berth, and time resting en route in a motel, hotel or similar regular place of rest.
That is not the same as on-duty time under the commercial vehicle hours-of-service rules, and neither is the same as paid time under your driver pay agreement. A carrier runs three clocks — safety hours, working hours and paid hours — and the payroll system needs to know which one it is holding.
Paying by the kilometre, by the trip or by percentage of the linehaul is normal in this industry and is not in itself a problem. Two obligations still bite. Overtime under section 174 is expressed as a multiple of the regular rate of wages, so a per-kilometre driver still needs an hourly regular rate derived for the pay period in order to calculate it. And section 254 of the Code requires the employer to furnish a written statement with each payment of wages setting out the period, the number of hours for which the payment is made, the rate of wages, the details of deductions and the actual sum received.
A stub that shows 4,180 kilometres and a rate per kilometre satisfies none of that. The hours have to be there, which means the hours have to be captured — which is why the electronic logging data and the payroll system need to be connected rather than kept in separate silos.
Section 184 entitles an employee to at least two weeks of vacation with vacation pay after one year of employment, three weeks after five consecutive years with the same employer, and four weeks after ten. Section 196 sets holiday pay at not less than one twentieth of the wages, excluding overtime pay, earned in the four-week period immediately preceding the week in which the general holiday occurs — and at one sixtieth of the wages earned in the preceding twelve weeks for an employee paid in whole or in part on commission who has twelve weeks of continuous employment.
A driver paid partly on a percentage basis may fall into that second formula. It is a different denominator over a different window, and it is not something a payroll package set up for a provincial employer will compute.
Worked example: the fleet that was right and wrong at the same time
A Manitoba carrier with fourteen power units runs interprovincially. Payroll is done in an off-the-shelf package configured when the company had two trucks and ran only inside the province.
The package pays overtime after 40 hours a week for everyone. For the highway drivers that is generous rather than unlawful, and nobody complains. For the yard and city drivers, the package has no concept of the 9-a-day ceiling, so a week where a city driver worked 10 hours on three days passes without a flag — and the regulation says no employer shall cause or permit it.
The larger exposure is on the stubs. Highway drivers are paid per kilometre and the stub shows kilometres, not hours, so the carrier cannot demonstrate what any driver’s regular rate was in any pay period. When a former driver raises a complaint two years later, the burden of showing the hours is on the employer, and the records do not exist.
The repair is unglamorous: classify each driver by week, derive hours from the logs, put the hours on the stub, and set a hard stop that blocks scheduling past the regulation’s ceilings.
Drivers who live in one province and report to a terminal in another raise a genuine question about which province’s rates apply to source deductions; Treadstone Law answers the two-province payroll deduction case directly. The consequence of getting remittances wrong is not only a corporate assessment — directors can be personally liable for unremitted payroll deductions, which is a good reason for a carrier’s owner to care about the payroll configuration personally.
If the undertaking connects one province with another or extends beyond a province’s limits, it falls within the Canada Labour Code definition of a federal work, undertaking or business. Purely intra-provincial carriers are generally under provincial employment standards.
Above the standard hours set under the Motor Vehicle Operators Hours of Work Regulations, which for a highway motor vehicle operator may exceed 40 hours in a week but may not exceed 60. Overtime is then paid at not less than one and a half times the regular rate.
Yes, but you still have to be able to show hours and a regular rate, because the wage statement must set out the number of hours the payment is for and overtime is defined as a multiple of the regular rate.
The regulations exclude time spent resting en route as one of two operators of a vehicle fitted with a sleeper berth from the definition of working hours. That is a separate question from what your pay agreement compensates.
We help Canadian carriers connect log data to payroll so overtime, holiday pay and wage statements are built from the same record.
