Much has been said about the recent Supreme Court of Canada’s decision in Uber Technologies Inc. v. Heller, released this week. We have previously commented on earlier decisions in this case here and here.

The decision of the Court was not startling and did not, contrary to popular rumour, grant Uber drivers or any other member of the “gig” economy any extraordinary rights.

The issue in the case at hand was a narrow one. Namely, was the mandatory arbitration clause in Uber’s driver contract requiring all disputes be sent for determination by an arbitrator in the Netherlands enforceable? The Supreme Court decided it was “unconscionable” and hence not binding. The contract, as discussed previously, required an Uber Eats driver to pay as much as one year’s total compensation to enable the case to proceed to arbitration in addition to travel expenses to the Netherlands. This was seen as an excessive burden, particularly when the drivers had no real bargaining rights when the contract was formed.

The decision echoed that of the Court of Appeal which had held that this contract was invalid as it prevented the workers from filing a complaint with the Ministry of Labour to enforce their rights under the Employment Standards Act. The Supreme Court decision did not deal with this issue.

In the first iteration of the case, the original motions judge did not offer an opinion on the enforceability of the clause and had simply stated that this issue should be decided by the arbitrator.

What Does All This Mean?

Thanks to the SCC’s decision to scrap the arbitration clause, this means that the proposed class action to have the drivers classified as “employees” rather than “contractors” and enforce employment rights may proceed to the next step of class action litigation in Ontario, but more on this later.

As for the arbitration clause itself, Uber, or any other company, may well choose to require future contracts to contain a mandatory arbitration clause, but one that would not impose such a great burden on drivers. For example, arbitration may take place in Canada rather than the Netherlands. It is not an easy construct as the drafter must be mindful of possible statutory rights, as stated by the Court of Appeal, a decision which notably was not reversed.

Often such clauses are intended to prevent class actions, which is yet another issue to be considered by legislators.

Next Steps in the Uber Case

Before proceeding to litigation, all class actions must be certified as such by a court. This will be the next step in the current case. If certified, the plaintiffs will be able to proceed with the argument that the drivers are “employees” as defined in the Employment Standards Act. This would lead to access to all statutory protections, such as minimum hourly rate of pay, paid vacations and statutory holidays, termination pay and all other provincial statutory employee rights.

This is not an easy case. The common law interpretation, of course, is not fixed, but generally, the test has been to look at the following factors in the determination of employee status:

  1. Control over the person;
  2. Ownership of tools;
  3. Chance of profit; and
  4. Risk of loss.

The first factor is often considered the most important. Consider that Uber drivers may sign on or off of duty as they please. Many “employers” may find this concept startling. Uber also allows its drivers to work with competing companies.

Uber supplies the operating software which is the guts of the business, however the vehicle is owned by the driver, generally speaking, and there is no risk of loss, apart from downtime.

Despite the current win in favour of the drivers, the case is far from pre-determined. Perhaps legislative amendments will be required to better distinguish employees from contractors in today’s ‘gig economy’. Ironically, many drivers prefer to be independent contractors as the tax treatment of their income is much more favourable.

This case may well find itself back in the Supreme Court of Canada on the primary issue of employee vs. contractor. Stay tuned.

Human Rights

The human rights regime in Ontario is much more welcoming for Uber drivers and similar workers in the gig economy. The above employee definition is not the rule of the day. Consider that in one case, a cab driver was allowed to file a complaint against a brokerage company for not allowing him to register his cab licence. The test here is one of “control and dependency” and is very liberally interpreted in favour of the complainant. Also, employers may not contract out of their obligations to provide human rights protections by means of mandatory arbitration.

Get Advice and Know Your Rights

Whether you are an employer or “employee”, getting advice prior to entering into a contract for employment or contractor services is advised. For advice on this issue and all employment law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise parties on a wide range of legal workplace issues. Contact us online or by phone at 416 364 9599 to schedule a consultation.