Written by David Doorey, York University
In a number of media stories published lately, journalists have written that gig workers “are considered to be independent contractors” because they have some flexibility over when and where they work. I won’t link to the stories because I’m not trying to call out our great labour journalists. But this characterization of the law is wrong. It is understandable that journalists might have trouble understanding the complexities of the law of worker status, even many lawyers do not understand it. However, it is important that legal issues not be misrepresented in journalism. This quick post will serve as a sort of introductory primer to the problem of worker status in Canadian work law to assist journalists or anyone interested in understanding how the law views gig workers such as Uber drivers. (See also my post here on Harvard’s OnLabor blog).
Firstly, worker status operates along a continuum in Canada. Here is a chart explaining this, from Chapter 4 (What is Employment?) of my textbook The Law of Work.
At one end of the continuum, we have true “employees”, workers who are subordinate to and economically dependent on an “employer” for wages. Typically, the employer controls when, where, and how the work is performed. “Employees” are covered by a large range of ‘labour and employment laws’ designed to ensure that employees are not taken advantage of by more powerful employers and also to control employee discontent and conflict at work.
At the other end of the continuum are true “independent contractors”. These are true entrepreneurs operating a business. They typically advertise their services or wares, have multiple customers, own all of the tools and equipment needed to perform their work, can hire other people to perform the work if they get too busy, they invest their own money in the business, have their own workplace, do not need to punch in or out at a specific time, have no one looking over their shoulder supervising their work, and are at risk of person financial loss if the company goes under. True independent contractors are treated in the law as little businesses and, as a result, most of the laws designed to regulate the employment relationship do not apply. A contract between a business and a true independent contractor is a business contract governed by contract law, business law, tax law and other fields of law, but not so much ’employment and labour law’.
In between those two categories is a huge grey area capturing workers who sell their labour as individuals and perform work as an individual and who have may more flexibility than a ‘true employee’, in the sense that they do not punch in and out of a workplace every day, but who nevertheless can not honestly be described as entrepreneurs in the true sense. They are not really ‘running a business’; they don’t market their services or have a list of customers; they haven’t invested much or any money in the business; they don’t or can’t hire other people to do the work for them; they don’t have their own office; they have little or no control over the price at which their goods or services are sold; they have some flexibility about when to work, but because they depend upon another entity to provide them the work, in practice this flexibility is more theoretical than real. If they want to eat, they need to work.
Canadian law calls workers in this third category ‘dependent contractors’ (DC). Dependent contractors are covered by some, but not all of the laws that were originally intended to cover ‘true employees’. For example, in the common law regime, DCs are entitled to notice of termination just like employees. In the collective bargaining regime, DC are treated as if they are true employees. That’s because labour relations legislation says that “employee” includes a dependent contractor. For example, Section 1 of the Ontario Labour Relations Act states that “employee includes a dependent contractor’ and then defines a DC as follows:
“dependent contractor” means a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor
Because we have three legally recognized categories of worker in Canada, it is inaccurate to pretend there are only two. [As an aside, if I were Minister of Labour, I would merge the categories of ’employee’ and ‘dependent contractor’ into a new legal category called “worker‘ and change the name of ‘independent contractors’ to ‘true entrepreneurs‘. This better captures what happens in practice today anyways and is cleaner and easier to understand. But that is another post!]
Now, there is little doubt in my mind that ‘gig workers’ such as Uber drivers are at the very least ‘dependent contractors’. The OLRB has already found this to be the case for example in Canadian Union of Postal Workers v Foodora Inc. in 2020. The OLRB concluded in that case:
171. The Board has carefully reviewed the evidence called by the parties using the factors historically considered by the Board from Algonquin Tavern, supra in the interpretation of the statutory definition of dependent contractor. The couriers are selected by Foodora and required to deliver food on the terms and conditions determined by Foodora in accordance with Foodora’s standards. In a very real sense, the couriers work for Foodora, and not themselves.
172. This is the Board’s first decision with respect to workers in what has been described by the parties and the media as “the gig economy”. However, the services performed by Foodora couriers are nothing new to the Board and in many ways are similar to the circumstances of the Board’s older cases. This is not the Board’s first case examining the relationship of couriers. The Board has been tasked with the same questions about dependent contractors in various sectors including transportation and construction. Such cases have always been fact-based inquiries that require a balancing of factors. This case is no different in many respects.
The OLRB’s conclusion that App-based gig workers are dependent contractors, and therefore ’employees’, was not a surprise to those of us who have worked with these issues for decades. Way back in the 1990s, I worked on cases involving taxi drivers who owned their own cars and could in theory decide when and where to work. They got fares through radio dispatch rather than phone Apps, but the work was pretty much the same as what Uber drivers do today. Taxi drivers and all sorts of other workers who work alone with some freedom have been found to be DCs and therefore employees over the years. There is nothing special about 21st century ‘gig’ workers, as far as this law is concerned.
So, Uber drivers are NOT independent contractors. It is incorrect to state that they are. Uber’s POSITION is that the drivers are independent contractors, but it is important to distinguish between Uber’s position, on one hand, and the actual law, on the other hand. Uber can state that its drivers are independent contractors only because there is no clear decision yet in Canada that says otherwise. But the day is coming when that issue will be decided by the OLRB and probably other tribunals and courts in Canada. There are a few cases before the OLRB that I know about where the status of Uber drivers may need to be decided. One is the unfair labour practice complaint against Uber that I discussed in a post earlier this week. That case involves the application of the Labour Relations Act, which as noted expressly provides that DCs are ’employees’.
Another case, called Heller v. Uber, is a class action lawsuit alleging systemic violations by Uber of the Employment Standards Act. That case is interesting because the ESA, unlike the LRA, does not expressly incorporate dependent contractors into the definition of “employee’. This means, arguably, that the scope of what is an “employee” is narrower under the ESA than under the LRA. This is a curious historical quirk in Ontario, one which the recent Changing Workplaces Review report recommended be abolished. The CWR argued that it makes no sense to have different definitions of “employee” under the LRA and the ESA. Noting that in practice the OLRB tends to interpret “employee” under the ESA broadly in a manner that pretty much mimics the approach taken by the OLRB when applying the LRA definition anyways, the experts recommended that the ESA be amended to expressly incorporate DC just as is done in the LRA.
The Ontario government inexplicably passed on this sensible recommendation so that the ESA still makes no specific reference to ‘dependent contractors’. However, that does not mean that Uber drivers and other gig workers are not ’employees’ under the ESA. While Uber drivers are certainly dependent contractors (in my opinion), they may also be “employees” as that category has been interpreted by the OLRB. Indeed, the Ontario government’s own Employment Standards Branch suggested that dependent contractors are likely already caught by the ’employee’ category in its own submission to the Changing Workplaces Review, as the CWR Report explains:
The program purports that a comparison of the results of
worker status cases decided under the ESA and the LRA reveals that the expansive definition of
employee under the ESA that is given by the Program, Ontario Labour Relations Board and courts likely captures the types of relationships that would fall into the
dependent contractor category under the LRA.
In other words, the fact that the LRA expressly includes DCs as “employees” and the ESA does not may not matter in practice. That’s because the OLRB has ruled, consistent with guidance from the Supreme Court of Canada, that the scope of the ESA must be interpreted broadly and purposively to cast as a wide a net as possible, because the statute is remedial, designed to protect workers who are in a position of economic dependence. In a recent decision, an Ontario Employment Standards Officer found that an Uber driver was indeed an “employee” under the ESA. When last I checked, that decision was under appeal to the OLRB.
So, to conclude, it is wrong to repeat Uber and the gig company claims that workers are independent contractors. They are not. At a minimum, it is almost certainly the case that gig workers are ‘dependent contractors’ under Canadian law. In fact, it should be presumed that Uber drivers are ‘dependent contractors’ unless a decision rules otherwise, based on the Foodora decision alone. Dependent contractors are employees under collective bargaining legislation and treated like employees under the common law of employment. There is also a very real possibility that Uber drivers and gig workers are also just straight up “employees” under employment standards legislation.
The possibility that the ESA has all along already covered Uber drivers is the reason I argued before that the Ontario government’s recent reforms that introduced a new category of digital worker with lesser rights than other “employees” under the ESA may be seen as a weakening of gig worker rights. If we begin discussions from the false presumption that gig workers are ‘independent contractors’, then we can be fooled into believing that half-assed reform measures to give gig workers ‘some legal protections’ are an improvement when in fact they are taking away superior entitlements that already exist but that have not been enforced.