The next gig is in court

The gig economy by its nature is made up of many independent workers providing services to customers, with various companies bringing those workers and customers together through technology and infrastructure — for a price, of course.

But how independent are the workers? Maybe not so much, at least according to Canadian Uber drivers who have launched a class-action lawsuit against Uber claiming $400 million in damages for breaching their rights as workers — class-action lawsuit that just got certified in court.

The gig economy has exploded around the world, with companies such as Uber, Lyft, Skip the Dishes and many others racing to meet the demand for instant and affordable service and delivery that technological advances have made possible. Many customers love the gig economy for the ease it brings to many tasks and transactions, while many workers like it because of the flexibility and independence it gives them.

However, that independence has its drawbacks and, perhaps inevitably, many of the big companies that run the gig economy have taken advantage of the fundamental imbalance between employer and employee that employment law often tries to mitigate.

In recent years, attention has been called to that imbalance. Gig economy workers are generally classified as independent contractors in their agreements with companies — in many ways, that’s the point of the gig economy — so companies don’t have to worry about any obligations under employment standards.

However, workers are finding themselves helpless as companies try to take advantage of the situation with unduly harsh working arrangements. And so legal battles have started cropping up in Canada and around the world as gig economy works are starting to assert their rights.

Various countries have seen movement towards increased rights for gig economy workers — Australia’s workplace regulator investigated Uber’s recruitment strategies after a driver’s group sought employee status,  the U.K.’s Court of Appeal ruled that two Uber drivers were employees, the U.K. Supreme Court found that an independently contracted plumber had an employment relationship with the company that assigned him work, and the European Parliament set minimum rights for gig economy workers, to name a few examples.

The question of employment status for gig workers has come to North America, too. In 2015, the California Labor Commission ruled that Uber drivers are employees, but three years later a U.S. judge in Pennsylvania found that Uber didn’t exert enough control over a group of limousine drivers to qualify them as employees, so the drivers were in fact independent contractors.

Closer to home, the Ontario Labour Relations Board last year ruled that Foodora couriers are dependent contractors — not quite labelling them as employees but recognizing that the company has some control over the terms and conditions of employment that makes them not totally independent, and therefore entitled to certain protections.

And this brings us back to the Canadian $400-million class-action lawsuit. The court certifying the lawsuit found that there is at least some basis to the idea that Uber drivers may have been misclassified as independent contractors, which could be a systemic issue for people providing services through the company. Although there’s a long way to go before the issue is determined, it raises serious issues to consider.

The class action — which was launched in 2017 — gained steam last year when the Supreme Court of Canada ruled that an Ontario Uber Eats delivery driver, on behalf of several other drivers, claimed that Uber didn’t allow him to access minimum entitlements under the Ontario Employment Standards Act. The service agreement with Uber, which most workers had to sign and was governed by Dutch law, required workers to take any concerns to mandatory arbitration in the Netherlands — a process that would cost a worker US$14,500 just to file for arbitration — rather than accessing local labour laws.

The Supreme Court found that the arbitration requirement was an unfair bargain that took advantage of the inequality of bargaining power between the driver and the company and the determination of whether the worker was entitled to employment standards rights as an employee should be determined in Canada: see Uber Technologies v. Heller, 2020 SCC 16.

The back-and-forth continues. Earlier this year, Uber Canada urged provincial governments to set up a “Flexible Work+” model requiring gig economy companies to offer benefits based on hours worked that allow workers to choose the benefits they want to fund, as well as safety training requirements. It’s been met with scorn by labour groups.

It will be interesting to see how it all plays out. Many gig economy workers like the flexibility of their arrangements, but a good proportion realized their situation is precarious. A poll of North America gig workers found that most are satisfied with their current gig, but a majority want to negotiate better wages and better benefits. And another study in 2019 found that gig economy workers were 50 per cent more likely to have feelings of helplessness.

The ease and timely nature of gig economy services is something many of us enjoy. However, it’s important to remember that it’s people who are providing these services — people who may not have the same employment standards protections that many people in regular occupations have due to their perceived independence. But that may be changing.