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Author:
Kelsey Orth

Date:
2019.01.17

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Employment-Related Contract Drafting

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THE EMPLOYERS' EDGE

CLASS ACTION AGAINST UBER DRIVING ONWARD IN WAKE OF RECENT COURT OF APPEAL DECISION

You may be aware of some of the worldwide challenges faced by Uber as an employer; in fact I wrote in this space last year about a specific ruling in the UK that we thought would or could invite parallels to be drawn here in Canada.  Now, thanks to a recent decision of the Court of Appeal for Ontario in Heller v. Uber Technologies Inc., we are closer to finding that out.

The 2017 class action filed in Ontario Superior Court (and referenced in last year’s article) alleges that Uber drivers are employees – and not independent contractors as all documentation between Uber and its drivers purports them to be, meaning that they would be afforded all the usual protections under the Employment Standards Act, 2000 (“ESA”).  In 2018 that class action was stayed by a motion judge who determined that the arbitration clause in Uber’s services agreement (the “Arbitration Clause”) was binding, thus precluding access to the Ontario courts. 

However, that stay was overturned on January 2, 2019 by the Court of Appeal for Ontario, who ruled that in this case the Arbitration Clause is not binding because it has the effect of illegally outsourcing an employment standard.  As we know, employers cannot contract out of minimum standards, and – regardless of what the eventual determination on the merits of this claim might be – requiring drivers to access an arbitration process in the Netherlands would amount to the same thing since it removes the jurisdiction of either or both of the Ministry of Labour and the Ontario courts.

In differentiating between Uber’s services agreements and normal commercial contracts, where arbitration clauses are commonplace, the Court of Appeal concluded that the Arbitration Clause seeks to take advantage of the significant disparity in bargaining power and financial means between Uber and its drivers, who would be forced to shell out over $14,000 USD just to file for arbitration under this process.  Writing for the unanimous court, Justice Nordheimer stated:

I believe that it can be safely concluded that Uber chose this Arbitration Clause in order to favour itself and thus take advantage of its drivers, who are clearly vulnerable to the market strength of Uber. It is a reasonable inference that Uber did so knowingly and intentionally. Indeed, Uber appears to admit as much, at least on the point of favouring itself when drafting the Arbitration Clause.

In terms of where the employment standard is violated, the Court’s reasoning was predicated on the fact that the provision in the ESA that allows workers to file complaints against an employer (through the Ministry of Labour) constitutes an employment standard itself:

"This is of some importance for, among other reasons, if a complaint is made then the Ministry of Labour bears the burden of investigating the complaint. That burden does not fall on the appellant. Under the arbitration clause, of course, the appellant would bear the entire burden of proving his claim.

In this instance, it did not matter that Heller chose to make a claim through the courts rather than under the legislation since the arbitration clause pre-empted even being able to/having to make that choice as a normal worker would in Ontario.

Although the Court’s decision here did not rule on either the merits of the claim or even whether or not the class would or could be certified – and it is still open to Uber to pursue an appeal of this decision – it would appear that we are driving farther down the road to finding out whether Uber’s contracting model is sustainable under Ontario law. 

If you have questions about contractor status or the types of agreements that might be right for your business, the team at CCPartners is here to help.


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