The quest to become employees: Unpacking the class action against Uber
By John Hyde
The Ontario Superior Court of Justice recently certified a class-action lawsuit against Uber, a decision which could lead to drivers and delivery personnel finally being considered employees of the company.
The main issue centered upon the relationship between Uber and those who provide different services under the company name through the use of different applications or “apps.”
For example, are Uber drivers properly classified as employees, independent contractors or customers?
The plaintiff group was composed of Uber drivers and Uber Eats delivery personnel, and their position was that they in fact were employees of the company.
A finding that the plaintiffs worked for Uber as employees would open the company up to obligations under Ontario’s Employment Standards Act, 2000 (ESA), including the provision of minimum wage, vacation pay, and termination pay.
On the other hand, Uber’s view was that these individuals were not employees, but instead independent contractors as per the language found in their service agreements with those using their apps.
Prior to entering into such an agreement with Uber, drivers and delivery personnel were required to apply and be approved. Uber also pays those who provide services under the company’s name while tracking their location as they use the app.
Finally, Uber calculates the fares and fees charged to users, restricts drivers and delivery personnel from accepting street hails and collecting fares not delegated by the app, and assigns an average rating that is expected to be upheld at the risk of having access to the app deactivated.
Relationship matters: Employee or contractor?
Workplace relationships fall into three main categories in Ontario: those between employer and employee; contractor and independent contractor; and contractor and dependent contractor.
It is important for employers to recognize that the terms they use to describe their relationship with an individual is not necessarily determinative of how a court will view the matter. Rather, the court will assess how the parties conducted themselves when making their decision.
This means that an individual can still be found to be an employee and have recourse to the ESA, even though their contract identifies them as an independent contractor or another classification.
In determining whether the individual is an employee or a contractor, employers must understand that the Ontario courts will analyze several factors. These criteria include the parties’ intentions and understanding of the relationship, how they behaved towards each other, and the ways in which business was conducted.
More recently, the Ontario court has stated that the central issue in determining if a worker is an employee or contractor is whether the individual is carrying on their own business or being paid to add value to someone else’s business. Employers should be cognizant of the relevant factors the courts will use in making this determination, which include:
- the extent to which the worker is controlled by the other party
- whether the equipment or tools used by the worker are his/her own
- if the worker hired their own helpers or aids
- the degree of financial risk assumed by the worker
- the degree to which the worker actually made an investment in the business
- the degree of managerial responsibility exercised by the worker
- the potential for the worker to profit from the completion of their tasks.
The control exercised upon a worker is the most common factor analyzed when ascertaining whether one is dealing with an employee or contractor.
Indeed, there is a good chance that an employer with substantial control over a worker will be found to be in an employment relationship.
Examples of control include the employer deciding when and where the worker is to complete their tasks, the clients that can be served, as well as the ability to set expectations and exercise discipline when those guidelines are not met.
Wide-ranging impact on gig economy
The court’s ruling and potential impact in having the individuals in question recognized as Uber employees carries significant consequences. For drivers and delivery personnel, this would mean that they gain the protections afforded by employment standards legislation by virtue of the job that they perform while using the Uber app and their relationship with the company.
At the same time, employers within the gig economy need to understand that whether or not an individual is an employee or contractor will be based upon the circumstances of the relationship as opposed to the simple use of a term in a contract or agreement.
Determining the nature of the relationship can be a complex exercise as the law continues to evolve.
Organizations should obtain expert legal advice on the front-end to properly assess and manage issues pertaining to misclassification of the relationship.
John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.
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