Tens of thousands of workers to benefit from higher minimum wage, workers' comp, termination pay
“It's a big shift from where we've been.”
So says David Price, associate at Stikeman Elliott in Calgary, talking about new legislation coming into effect in British Columbia for ride-hailing and delivery workers who accept assignments through a third-party app.
B.C. released new regulations mid-June ahead of the legislation taking effect in September, which includes a higher minimum wage, workers’ comp and termination pay, and the government estimates there are roughly 11,000 ride-hailing drivers and 35,000 delivery workers in the province who will see the benefits.
The new rules essentially put these gig workers in a hybrid position, says Price.
“They're not quite a contract [worker], they're not quite an employee. They have some of the minimum standards now that regular employees benefit from that contractors don't have, but they don't have all of those entitlements like overtime, vacation and holiday pay — they’re exempt from that.”
Independent contractors versus employees
The new legislation raises some big questions, says Christopher McHardy, partner at McCarthy Tetrault in Vancouver
For one, it’s targeting workers who, up until now, have been considered independent contractors.
“The legislation doesn't really change them from independent contractors into employees. They're only treated as employees for these limited purposes set up in the new legislation. So, in effect, these workers remain independent contractors that have a certain subset of employment standards that apply to their work.”
Companies such as SkipTheDishes are going to have to be careful in how they continue to manage these workers, says McHardy.
“To the extent that they change dramatically how they interact with these workers, they potentially could be moving them along the spectrum from an independent contractor to a more traditional employment relationship. And if that occurs, if they start to treat these workers in a way that a court or tribunal determines makes them more of an employee than an independent contractor, then the whole Employment Standards Act will apply to them.”
It’s a “significant” change, says Price, and a “very new direction” from the government.
“I think there's going to be a shift where people are going to start to think, ‘Well, this could become, essentially, full-time employment in everything but name,’” he says.
“It's going to be a lot more lucrative for these workers to participate in it; and it’s going to be safer for some of these workers because they're now going to have workers’ compensation, they're going to have some protections that they didn't benefit from before.”
But it's also going to increase the cost of business for these online platform companies, such as Uber and Lyft, says Price.
“They’re now going to have to, I think, out of necessity, find ways to either pass on costs to consumers or make cuts elsewhere.”
Minimum wage for gig workers
As part of the new rules, B.C. is establishing a minimum wage of $20.88 — which is 120% of B.C.’s general minimum wage (currently $17.40) — and apply it to the workers’ “engaged time.”
Engaged time begins when a worker accepts an assignment through to its completion. This time does not include the time spent waiting between assignments.
That means it starts when the delivery services person is actually performing a service, so they're enroute, they're going to pick something up and take it to a customer or they've gone to pick up an individual who hailed them for transportation, and then pick them up and drop them off, says Price.
“If somebody has actually accepted an order, for example, but is not actively engaged in that assignment… they haven't moved, the app is telling you your order is ready for pickup but maybe they're filling up the tank with gas or taking a smoke break, that's not going to count as ‘engaged.’ And that would work against the delivery service worker.”
Top-up to gig workers’ minimum wage
However, platform companies will be required to top up the difference when the earnings paid in a pay period do not meet the minimum earnings standard for the engaged time worked, according to the B.C. government.
It’s a bit “curious,” says McHardy, “to compensate for the potential lack of earnings when these drivers are not actively engaged on assignments” — along with the fact that drivers will be paid an allowance per kilometer for personal use of their ebike, scooter or vehicle.
“I think what the government did is probably a little bit of research relating to what these types of workers were making, and trying to estimate how much time they spent to make it and probably is… aggregating to get these workers to a niche around minimum wage for regular employees.”
But tips are not included as part of those earnings, he says.
“What's potentially problematic from the platform operators’ perspective is you could have people that are sitting idle for some time, because they're not necessarily accepting assignments, and then, potentially, they will be getting topped up to minimum wage. And, of course, the platform operators are not permitted to touch the tips that they're receiving from customers.”
Workers’ comp coverage
With B.C.’s changes, individuals will be eligible for workers’ compensation benefits, including vocational rehabilitation services, for work-related injuries.
Platform companies will be responsible for:
- registering for coverage with WorkSafeBC and paying premiums
- following health and safety rules to keep workers safe
- reporting injuries and diseases
- investigating significant incidents.
Platform operators are now going to have to ensure that they're remitting premiums on behalf of their services workers, says Price.
“If [people] are injured in the course of their work, then they would be considered a worker covered under workers’ compensation, and injured during the course of their work. And so they would be covered.”
But there's a potential that that could be abused, says McHardy.
“If you were a worker, you could just have your app on the whole time and choose when you're going to accept assignments or not — so, you might be just driving across town to see a friend and you might have no intention to accept an assignment — but if you keep your app engaged, there's a potential that if you were involved in a car accident, you could claim that workers’ compensation.”
72 hours’ notice of suspension, deactivation
As of September, platform companies in B.C. will also be required to inform a worker in writing of the reason for a suspension or deactivation of their account. These employers will no longer be allowed to suspend workers indefinitely. And in most cases when workers are suspended, companies must either reinstate the worker or terminate their account within 14 days.
The platform worker must also be given the opportunity to respond of request a reconsideration of the suspension, says Price.
“That’s going to be very different, I think, for many platform operators that have not been working under that arrangement for the time being. So, that's going to be a significant change.”
It’s essentially about a fairness quotient, says McHardy, citing the fact that for many of these workers, this job is an important source of income.
“I think the government's just looking for a way to make sure that platform operators aren't able to simply just cut them off without notice, and without proper reason to do so.”
Termination pay for gig workers
Also of note with the new legislation: Companies such as Uber will be required to give written notice or compensation for length of service if they want to terminate a worker — unless there is just cause for the termination.
That change involving notice or pay in lieu of notice shouldn’t be understated, says Price.
“Right now, many contractors have very limited requirements for notice to be let go by online platform companies. Now, [companies are] going to have to essentially treat them as an employee, depending on their length of service.”
For example, if an individual worked for a platform company for eight years, they would be entitled to eight weeks’ notice or pay in lieu of notice, he says, “rather than what their contract may have said, which could be 14 days, [which] is pretty typical for a contractor. And so that's going to be a big change.”
Record-keeping with B.C.’s new rules for gig workers
As part of the new rules, when platform companies offer an assignment to a worker, they must show the estimated earnings for completing the assignment.
Companies will also be required to provide the gig workers with wage statements every pay period so workers can ensure they are paid correctly.
For many platform operators, the overall changes are going to represent a significant increase in paperwork, says Price, citing the detailed reports on deliveries, estimated earnings, and wage statements every pay period.
“It’s going to be more burdensome. And they're going to have to provide a significant amount of information, including hours of engaged time, total number of kilometers traveled during the engage time, that'll loop into the expense allowance that's payable to the individual. The total amount paid or payable for the assignment work is also going to have to be included on that statement.”
Additional costs for employers
There's definitely going to be administrative costs and headaches for these operators, as well as increased costs in terms of paying the operators and kilometers, and potentially paying any kind of termination notice if there's without cause termination, says McHardy, “although I don't expect that that will be significant because if there isn't any cause, there really isn't much reason for the operators to terminate relationships.”
But any increased costs could be passed on to the customer, he says.
“It’s going to be interesting to see what happens with tips; it's going to be interesting to see what happens with volumes, because you might now have more people entering into the space because they see that there's workers’ compensation, they see that there's better wages. So, suddenly, there's more competition, but potentially also less demand.
“While [the new legislation] is certainly well-intended, it could have some consequences that perhaps have not been fully assessed or maybe fully thought out.”
