Ottawa toughened Labour Code penalties for misclassifying workers

In February 2026, the federal government tightened how Employment and Social Development Canada's Labour Program enforces the Canada Labour Code against employers that misclassify workers, a practice at the heart of the trucking industry's Driver Inc. debate. The Canadian Trucking Alliance (CTA) welcomed the changes.

The measures, overseen by Minister Patty Hajdu, expand penalties, speed up enforcement and make more information about non-compliant employers public.

What changed

• Compliance orders issued under section 251.06 of the Code now warn employers that if they fail to show evidence of corrective action, inspectors may conclude, on reasonable grounds, that the violation is continuing.
• Orders also remind employers that under section 278, a separate administrative monetary penalty (AMP) can be imposed for each day a violation continues or happens again.
• Employers caught misclassifying workers in a follow-up inspection after an earlier AMP could face daily penalties.
• The Labour Program can now issue an AMP without waiting for a review or appeal of a compliance order or direction to finish, although those review and appeal routes remain open.
• The public naming policy was widened to include employers that obstruct investigations, not just those found to have misclassified workers.

Industry view

The CTA said the changes followed long-standing concerns it and other industry groups had raised about how AMPs were applied, especially penalties for misclassifying drivers.