In a landmark ruling Friday that could finally pave the way for Uber Technologies Inc. workers in Canada to be recognized as employees, the Supreme Court of Canada dismissed an appeal from the ride-sharing firm to block a potential class action lawsuit launched by a driver back in 2017.
The case involved David Heller, a former Uber Eats driver who tried to launch a $400-million class-action lawsuit against the ride-sharing giant in order to get the company to recognize drivers as employees instead of independent contractors, and provide them with standard benefits, vacation pay and minimum wage according to the jurisdiction they worked in.
But Uber argued that the proposed class-action would have to be arbitrated in the Netherlands, where the company is registered, effectively depriving Heller of relief under Canadian federal and provincial labour laws.
In Friday’s decision, the Supreme Court ultimately ruled against Uber because it argued that there was a fundamental “inequality of bargaining power” in Uber’s push to have the dispute mediated in the Netherlands.
The process would have cost Heller approximately $20,000.
“Labour of employment disputes are not the type that the International Commercial Arbitration Act is intended to govern. The Ontario Arbitration Act therefore governs,” the judgment read.
A win for Uber would have effectively ended employee rights in this country,” declared Lior Samfiru, Heller’s lawyer. “The Supreme Court of Canada was well aware of this issue and determined that a company operating in Canada must abide by Canadian laws and cannot eliminate employee rights by imposing the laws of a foreign jurisdiction.”
According to Samfiru, Uber admitted during the course of the case that they had chosen the Netherlands because it was “convenient” for them. “An interesting fact is of the 10,000 workers Uber has, not a single person has ever fought an arbitration in the Netherlands,” Samfiru added.
Last November, an Ontario Court of Appeal ruled that Uber’s contract clause which forces an arbitration process in the Netherlands to settle disputes, was “unconscionable” and “unenforceable.” Uber then appealed that decision, which resulted in Friday’s Supreme Court ruling.
Heller — who initiated legal action against Uber in 2017 because he was asked in a cell phone message from Uber to accept changes to the way in which he was compensated — will now move towards getting the class-action certified.
Uber did not respond to a request for comment.
The ride-sharing behemoth, along with other similar tech companies such as Lyft Inc. and Foodora who rely almost exclusively on gig economy workers, have come under increased scrutiny for their reluctance to reclassify independent contractors as employees with the right to receive benefits such as sick leave and vacation pay.
The level of scrutiny has grown during COVID-19, as policymakers in Canada were faced with sudden and soaring unemployment concentrated among lower-wage, temporary workers scattered across the gig economy.
“COVID-19 has shown us how dangerous it is for many gig economy workers on the frontlines, how ill-paid they are, and how they need more legal and legislative protection,” said Sheila Block, an economist with the Canadian Centre for Policy Alternatives.
“The implication of this ruling is that despite the huge legal efforts that these platforms use to limit the rights of workers, the courts have sided with workers,” she added.
The Supreme Court decision comes just months after the Ontario Labour Relations Board mandated Foodora workers as dependent contractors that resemble employees, rather than independent contractors, clearing the way for them to unionize.
Though the decision was precedent-setting, it prompted the Berlin-based company to pull out of Canada, citing the inability to reach “a level of profitability in a highly-saturated market.”
Block says labour laws in Canada have not been sufficiently modernized to keep up with the changes in the structure of the labour economy. “We have, for example, employment standards legislation in Ontario that was written in the 1950s and 1960s geared at large groups of men going into large factories and mines which simply doesn’t reflect how our economy operates in 2020.”
Gig economy workers across North America have gained some success in their fight for better working conditions. Earlier this month, California’s Public Utilities Commission ruled that Uber and Lyft drivers are “presumed to be employees” under the state’s new gig employment law, which obliges employers to pay their workers a minimum wage and contribute to payroll taxes for those workers which then allows them to receive unemployment insurance.
In Toronto, 300 Uber drivers for Uber’s premium Black service are in the process of fighting for unionization with the United Food and Commercial Workers Union.