Written by David Doorey, York University
A story in yesterday’s Toronto Star caught my attention. It explained how Uber Canada has introduced a new revised version of its mandatory arbitration clause. As discussed at length on this blog (see here, here, here, here, here, and here), the Supreme Court of Canada ruled earlier this summer in Uber v. Heller that Uber’s previous forced arbitration clause was unlawful. That earlier clause, which drivers were required to agree to as a condition of driving for UberEats, required drivers to forgo their statutory right to pursue a claim for minimum employment standards before the Ontario Labour Relations Board and instead pay thousands of dollars to launch an arbitration hearing to be held in Amsterdam!
The SCC ruled that the arbitration clause was “unconscionable”. An unconscionable contract is one in which there is (1) inequality of bargaining power and (2) a resulting improvident bargain. Those conditions were satisfied in this case. Justice Brown, writing for himself in concurring reasons, ruled that the arbitration clause was unenforceable on the basis that it was contrary to public policy, because it made it effectively impossible for a driver to obtain a remedy.
Notably, the SCC did not overrule or even address head on the Ontario Court of Appeal’s decision that the Uber arbitration clause also constituted an unlawful contracting out of the Employment Standards Act’s enforcement machinery. The Court of Appeal ruled that the right to pursue an employment standards complaint and to have it investigated protected in section 96 of the ESA is an employment standard. Therefore, section 5 of the ESA prohibits an agreement to waive access to the right to file a complaint and the Uber arbitration clause amounted to an unlawful contracting out.
I will return to this part of the Court of Appeal’s analysis in a moment, but for now, note that the SCC did not overrule this analysis. Therefore, the Court of Appeal’s decision that an arbitration clause in an employment contract that prohibits the right of an employee to pursue a breach of employment standards legislation in either a complaint to the Minister or a civil proceeding remains the law in Ontario.
Uber Canada has now introduced a new arbitration clause. Here is the text applicable to UberEats drivers. I assume similar language is being rolled out for the other branches of Uber.
A number of points are worth noting about this new clause.
Firstly, Uber has given the drivers the option of opting out of the clause within 30 days, although to do so, the driver would need to scroll to the end of the contract that pops up on their phone, find the new language, and then manually email Uber with a request to opt-out. Most drivers will just click “I agree” since, really, who reads these standard form digital contracts? Uber could have required drivers to opt into the arbitration clause, but that would defeat the purpose of trying to get as many people to “agree” to the arbitration clause as possible.
Secondly, the arbitration clause states that drivers will not be punished for opting out. Signing the arbitration clause is not mandatory. Whether opting out drivers experience any disadvantage in practice is a factual question.
Thirdly, the new arbitration clause requires arbitration locally rather than in Europe, and requires that the costs be “apportioned between the parties on accordance with applicable law”. It requires the driver to pay the arbitration filing fee up to the cost that would have been incurred if the driver had filed the complaint in a court (after which Uber would pay the rest). These changes are obviously designed to address the SCC’s rulings on unconscionability.
Fourthly, the new clause requires the driver to attempt to negotiate a settlement with Uber before filing the paperwork to commence an arbitration.
Fifthly, the new clause preserves the right of a driver to file “a claim with a government agency” and does not purport to prevent that agency from “adjudicating and awarding remedies based on that claim”. Hence, a driver who agrees to the new clause could still file an ESA complaint with the Ministry of Labour, Training and Skills Development.
However, and sixthly, the new clause blocks a driver who has not opted out of the arbitration clause from pursuing a civil action for breach of the statute either individually or as part of a class action. The new clause introduces a “class action waiver” that would block drivers from joining a class action proceeding against Uber:
This Arbitration Provision affects your ability to participate in class or collective actions. Both Uber and you agree to bring any dispute in arbitration on an individual basis only, and not on a class or collective basis on behalf of others. There will be no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action, or for you to participate as a member in any such class or collective proceeding (“Class Action Waiver”).
From Uber Arbitration Clause, 2020
Obviously, Uber is attempting here to address the problems relating to the previous arbitration clause identified by the Court of Appeal and the SCC decisions. I won’t address here how Canadian courts have dealt with class action waivers generally (here’s one recent case from BC ruling that a class action waiver was unenforceable under that province’s Class Proceedings legislation). I will focus on the question of whether the new arbitration clause complies with the courts’ decisions in Heller decision.
My initial quick thoughts on this are that: (1) the new clause goes some way towards redressing the unconcionability concerns addressed by the SCC, and (2) that the new arbitration clause remains unlawful for the reasons explained in the Court of Appeal decision.
The new clause still contracts out of the right of an employee to pursue an employment standards complaint pursuant to the legislation. It is true that the new arbitration clause preserves the right of a driver to file a statutory complaint with an agency and to have that complaint investigated and potentially adjudicated by a statutory tribunal. Therefore, access to the statutory machinery is not completely blocked as it was under the clause that was struck down by the SCC and Ontario Court of Appeal.
However, the ESA protects a right of employees to chose whether to pursue their complaint through a statutory claim or a civil claim in court. That right is protected in section 98 of the ESA. The new arbitration clause, like the old one, effectively removes the driver’s option of pursuing a statutory claim through a civil proceeding, in a class action if they so choose. That amounts to a contracting out of the right of an employee to pursue a civil proceeding for unpaid wages under the ESA. The Court ruled that an arbitration is not a civil proceeding. It doesn’t matter that the driver has “agreed” by not opting out: the parties cannot contract out of the statute, period. That is what the Court of Appeal decision told us.
The Court of Appeal addressed the fact that Heller had opted for civil litigation rather than a complaint before the OLRB, and ruled that this made no difference to the finding that the old arbitration amounted to an unlawful contracting out of the statute. Here is what the Court of Appeal said on this matter:
[42] I am aware that the appellant [Mr. Heller] has not, in fact, chosen to make a complaint under the ESA but rather has commenced this proposed class action. That fact does not alter the analysis, however, for a few reasons. The first reason is that, if the Arbitration Clause offends s. 5(1) because it contracts out of the investigative process, the provision is invalid, irrespective of what the appellant does or does not do.
[43] A second reason is that it is the appellant’s right, under the ESA, to avail himself of the “civil proceeding” exception to the complaint process. It is his choice whether to take that route, and he is only barred from making a complaint if he chooses to take it. The Arbitration Clause essentially transfers that choice to Uber who then forces the appellant (and all other drivers) out of the complaints process. I reiterate that, in addressing this issue, we are dealing not just with the appellant but with all persons who might be in the same position as the appellant. The interpretative process must take that into account.
[44] A third reason is that this is a proposed class action. That fact provides the obvious reason why the appellant is availing himself of a civil proceeding over the complaint process. If the class proceeding is certified, then the central issues will be determined, not just for the appellant, but for all persons who find themselves in the same position as the appellant. It is well recognized that this is one of the central benefits of, and reasons for, the Class Proceedings Act, 1992, S.O. 1992, c. 6.
[45] A fourth reason flows from the previous two and that is that under the complaints process, and also under the proposed class proceeding, the central issues will be determined for everyone who finds themselves in the same position as the appellant. If the Ministry of Labour were to make a finding regarding the appellant, it would be a public finding upon which others could rely. The same is true through the class proceeding, if certified, since any decision in that proceeding would be binding on the members of the class (except for those who opted out). It is clear that there is no ability for a class determination under the Arbitration Clause nor is any determination through the arbitration a matter of public record upon which others can rely.
Heller v. Uber, Ontario Court of Appeal, 2019
Therefore, my quick hot take is that the new Uber arbitration remains an unlawful contracting out of the Ontario ESA. Please send your comments and analysis and explain why I’m wrong, if I am.
I personally believe that our governments should be intervening with legislation to prohibit waivers that purport to block workers from pursuing class action lawsuits to enforce basic labour standards. These sorts of clauses have created a shit-show in the United States where workers have basically no effective labor protections any longer. There is no room in Canada for the importation of backwater American legal doctrines that are designed to exploit precarious workers, impede access to justice, and further employer interests that have driven that country to the largest income inequality levels in the advanced economic world. Our governments should stop the push by foreign corporations to import into Canada regressive anti-worker contractual shenanigans like Uber’s arbitration clauses. Moreover, the push to prohibit arbitration clauses applicable to statutory labour standards should be supported by Canadian business leaders who talk all the time about how they believe in treating Canadian workers with dignity and fairness. Time to talk the talk and walk the walk. Every Canadian worker should be able to pursue statutory claims through the public systems we’ve created to enforce those claims.
David Doorey, “Uber Reinvents its Controversial Arbitration Clause After Uber v. Heller” Canadian Law of Work Forum (September 1 2020): https://lawofwork.ca/?p=12990
