Written by Professor Bethany Hastie, University of British Columbia
The Supreme Court of Canada released its much-anticipated ruling in Uber Technologies Inc v Heller last week. The decision found that a mandatory arbitration clause in Uber’s contracts, which required disputes to be resolved through mandatory arbitration in the Netherlands, at a cost of $14,500 to the individual, was unconscionable. This paves the way for a class action lawsuit for employment standards violations against Uber to proceed in Ontario, bringing into central focus the question of whether Uber drivers are employees. How that question is answered will have significant implications for the regulation of app-based “gig work” in Canada.
Gig workers, such as Uber drivers, are typically unilaterally designated as “independent contractors” under the company’s contracts. Independent contractors are excluded from the application of most labour and employment laws. In practical terms, this means that these workers do not benefit from employment standards, such as a minimum wage, nor can they unionize.
However, a court may find that workers are employees even if their contract states that they are independent contractors. In assessing whether a worker is an employee, courts look to factors such as: Who owns the tools or equipment used for the work? Who bears the risk of economic loss and chance of profit? And, what degree of control does the enterprise have over the conditions of work?
A recent decision of the Ontario Labour Relations Board (OLRB) determined the Foodora couriers are “dependent contractors”, a category of worker closer to employee than to independent contractor. This designation allows workers to unionize under the Ontario Labour Relations Act. Although the issues in Uber v Heller relate to private employment law, the factors considered for the dependent contractor test under the Labour Relations Act substantially overlap with those used to determine employment status under private employment law and under employment standards legislation. As such, the findings in CUPW v Foodora create a strong foundation from which Uber drivers may argue that they are employees, and thus subject to the benefits and protections under the Employment Standards Actin the current class action lawsuit.
At issue in CUPW v Foodorawas whether the couriers are independent contractors, as their contract designated, or dependent contractors, entitling them to unionize under the Labour Relations Act. The Ontario Labour Relations Board decision reviewed numerous factors at length in its analysis, though it drew particularly insightful conclusions regarding the issue of tools, a chance of profit, and the level of control exerted by the enterprise.
First, the OLRB found that Foodora’s app was the central tool used in the work, and that this tool was owned and maintained by the company. This finding was an insightful departure from tendencies to characterize the vehicle as the central tool used by ride-sharing and food-delivery gig workers, which has been a powerful argument against characterizing gig workers as employees. The OLRB’s interpretation of the app as the most important tool – what it called the “lynchpin” of the delivery system – lays a strong foundation for a similar finding in the lawsuit against Uber.
Second, the OLRB considered whether Foodora couriers had a real chance of profit, a factor commonly associated with true entrepreneurial activity. The OLRB drew a clear and compelling distinction between the ability to simply earn more money by working harder, and a real chance at profit associated with entrepreneurial activity. While gig workers can make more money by working more shifts or working for multiple companies (also called “dual apping”), this is not the same as having a real chance at profit. This analysis applies equally to Uber drivers and other gig workers as it does to Foodora couriers.
Third, the OLRB discussed the level of control that Foodora has over its couriers, including over how much a courier works, when they work, and where they work, all of which impact their earning potential, and which are determined based on incentive and “strike” systems. Similar incentive and discipline systems for managing performance are known to be used by Uber and other app-based companies, with the effect of exerting a similar level of control over workers.
Many of the factors presented in the Foodora case also exist for Uber drivers: the app is the central tool, the “lynchpin” of the enterprise; the drivers do not have a real chance of profit, they can simply earn more money by working harder; and, Uber exerts significant control over drivers’ working conditions. As such, it is likely that the decision in CUPW v Foodora could set a precedent and strong foundation from which to recast Uber workers as employees, leading to a favourable outcome in the ongoing class action lawsuit in that regard.
The question of employment status for gig workers has been deeply contested, and countries have come to very different conclusions. The answer to this question determines whether gig workers benefit from labour and employment law, or don’t. If Uber drivers are found to be employees, and not independent contractors, it will, coupled with the Foodora decision, set a strong precedent for gig workers across Canada. It will mean that these workers can benefit from basic employment protections, like a minimum wage. It will allow them to unionize in order to improve their working conditions. It will prevent app-based companies from unilaterally imposing conditions of work that clearly violate Canadian workplace regulations.
Bethany Hastie, “What CUPW v Foodora Reveals for the Future Litigation in Uber v Heller” Canadian Law of Work Forum (July 6 2020): http://lawofwork.ca/?p=12843