A popular legal issue in recent years concerns the employment status of workers in the “Gig” economy, such as Uber drivers. Currently these drivers do not enjoy the benefits provided under the Employment Standards Act because they are not yet defined as “employees”. Instead, Uber drivers are currently classified as independent contractors and therefore are excluded from the Employment Standards Act benefits.
A recent Ontario decision, however, might provide Uber drivers with the opportunity they need to be given employee status.
Different Employment Relationships
There are three types of workplace relationships that currently exist in Ontario. These are:
- The Employer-Employee Relationship;
- The Contractor-Independent Contractor Relationship; and
- The Contractor-Dependent Contractor Relationship.
The distinction is vitally important. As stated, employees enjoy the benefits of the Employment Standards Act in Ontario. Independent contractors do not. As Uber drivers are currently classified as independent contractors, they do not have these benefits.
The classification of “dependent contractor” exists as an intermediate category between employee and independent contractor. Dependent contractors are not employees, but they nevertheless benefit from an implied agreement not to terminate the arrangement without reasonable notice. According to the Ontario Court of Appeal, dependent contractor relationships are “non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity.”
Although the parties may define their relationship in the contract as that of contractor-independent contractor or employer-employee, this is not dispositive of the issue. What the parties choose to call themselves may be relevant, but it is not determinative.
Determining Employment Status
Instead of taking the parties at their word, the nature of the employment relationship at issue will be determined by the courts based on the conduct of the parties. This determination involves a two-step process. Firstly, the court must determine whether the worker is an employee or a dependent contractor. If the worker is an employee, the analysis ends. If the worker is a contractor, the court must move to the second step of the process: is the worker an independent contractor or a dependent contractor?
a) Employee or Contractor?
In distinguishing between employee and contractor, there is unfortunately no universal test to be applied. The central question, according to the Supreme Court of Canada, is whether or not the worker is providing services as a person in business on his or her own account. Key to this question is the degree of control the employer has over the worker’s activities. Other factors, however, include:
- a) Whether the worker provides his or her own equipment;
- b) Whether the worker hires his or her own helpers;
- c) The degree of financial risk taking by the worker;
- d) The degree of responsibility for investment and management held by the worker; and
- e) The worker’s opportunity for profit in the performance of his or her tasks.
Key indicia of “control”, the most traditional and frequently used method of determining employee status, include:
- a) The ability to decide when, where, and by what method the employee will perform his or her work;
- b) The ability to determine which customers can be served or sold goods, and which cannot;
- c) The employee’s ability or inability to attend meetings; and
- d) The employer’s ability to discipline the employee for breaches of company policy.
The more control a worker has, the more likely the worker is a contractor. If the worker provides his own equipment, hires his own helpers, has financial risk and an opportunity to profit, that worker will more likely be a contractor.
b) Independent Contractor or Dependent Contractor?
If it is decided that the worker is a contractor, it must then be decided whether the worker is an independent contractor or dependent contractor. Factors to consider in making this determination include:
- a) The extent to which the worker was economically dependent on the particular working relationship;
- b) The permanency of the working relationship; and
- c) The exclusivity of the worker’s relationship with the enterprise.
The more permanent and exclusive the contractor relationship, the more likely the worker is a dependent contractor and consequently is entitled to reasonable notice.
Significance on Uber Drivers and the “Gig” Economy
In the recent Ontario decision Uber v Heller, Justice Perell certified a class action wherein Uber drivers are seeking a declaration that they are employees. The opportunity to obtain employee status is therefore quite real. This would be quite huge, and would be a serious problem for Uber. A finding that Uber drivers are indeed employees would make Uber liable for their obligations under the Employment Standards Act. Uber drivers would be entitled to all the same minimum rights as other employees in Ontario, including such benefits as receiving minimum wage. Given the remarkably high number of Uber drivers (i.e. over 360,000), this would be a very, very serious problem for the company.