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SCC Case Paves the Way for Determination of Employment Category for Ride Share and Food Delivery Drivers

02-Jul-20

By McLennan Ross Labour & Employment Team

On June 26, 2020, the Supreme Court of Canada released its decision in Uber Technologies Inc. v. Heller, 2020 SCC 16.

Mr. Heller was a driver for UberEats, Uber Technologies’ food delivery service. In 2017, Mr. Heller brought an action to determine whether Uber’s drivers were employees or independent contractors. Uber argued the matter could not be heard in court because as part of his agreement to drive for Uber because Mr. Heller had agreed to an arbitration clause that subjected disputes to a commercial dispute process. Uber argued that rather than bring his issue forward in court, Mr. Heller was obligated to pursue the matter through the stipulated arbitration process instead.

The catch was that this particular arbitration clause required the matter be heard at the International Chamber of Commerce in the Netherlands. The process included a cost of $14,500 USD just to commence proceedings, and not including travel or legal fees.

Mr. Heller argued that the arbitration agreement was “unconscionable”, a legal phrase meaning that it was unfair and contrary to common sense or good conscience to such a degree that it should not be enforceable.

On Mr. Heller’s initial application, the Court sided with Uber’s position that the arbitrator should decide whether or not the clause was unfair. On appeal, however, the Ontario Court of Appeal decided that the Court had jurisdiction to decide whether the clause was unconscionable, and it held that the clause was, in fact, invalid.

Uber appealed the decision to the Supreme Court of Canada, which dismissed Uber’s appeal. The majority held that the extensive fees for initiating the arbitration in the Netherlands constituted a significant barrier to access for justice. This would potentially insulate Uber from having their terms of service challenged by its workers. The fees to commence arbitration were close to Mr. Hiller’s annual income from Uber and disproportionate to any award that could be foreseen when the agreement was entered into. The disadvantages faced by Mr. Heller in trying to protect his bargaining interests and the unfair terms that resulted meant the arbitration clause was unconscionable and invalid.

The subject of Mr. Heller’s initial action is to determine whether Uber drivers should be considered employees rather than independent contractors because Uber has so much control over its drivers’ working conditions. This determination will have serious consequences for workers in the ride share or food delivery industry and the technology companies that utilize their services. If a court finds that these drivers are employees, then their employers would be required to comply with applicable provincial Employment Standards legislation, including minimum wage protections, overtime, vacation and holiday pay and termination pay. It would also have to advise drivers of their entitlement to those payments, and accurately track their hours.

In May of last year, the Office of the General Counsel for the National Labor Relations Board in the United States, issued a legal opinion that Uber drivers were independent contractors, essentially resolving the issue there. The question remains whether Canadian courts will follow suit by making a similar determination.

This decision by the Supreme Court of Canada allows Mr. Heller’s initial action to proceed, which means that a Canadian court will soon be able to determine whether Uber’s drivers are employees or independent contractors in Canada.

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