In this digital age where technology is revolutionizing the gig economy, food delivery and the taxi industries have been taken over by mobile apps. Uber is a popular multinational ride-hailing company that operates in Ontario. The drivers and riders may arrange for rides through the Uber mobile app, which also facilitates payments. The independent contractor drivers are a part of a growing gig economy, where workers may choose to accept each ride assignment at their own time. Uber drivers range from those who take the occasional, part-time gig to earn some cash on the side to full-time drivers who depend on the app to earn a living.
A recent landmark decision by the Supreme Court of Canada, Uber Technologies Inc. v. Heller 1, has paved the way for Uber drivers to take the next step in their fight to be recognized as employees and receive the rights and entitlements as afforded to employees under the Employment Standards Act.
The Facts
The plaintiff, David Heller, was a driver for the “Uber Eats” food delivery program. In order to qualify as an Uber driver, he had to accept the terms of Uber’s standard form services agreement, which included a clause that required all disputes to go through arbitration in the Netherlands. The initial arbitration fee would amount to $14,500 USD, a prohibitively significant amount for most drivers. As arbitration was mandatory, if a driver did not arbitrate in the Netherlands, and pay the fee, they would be barred from any further actions against Uber.
Heller argued that Uber drivers are employees, which entitles them to protection under the Employment Standards Act. Uber responded by bringing a motion to stay the proceeding in favor of arbitration in the Netherlands, arguing that the arbitration clause in the agreement precluded any other forms of litigation.
The Ruling
On June 25, 2020, the Supreme Court ruled that the arbitration agreement is invalid. Drivers in Heller’s position cannot be expected to understand the financial and legal implications of accepting the arbitration clause.
The Court applied the unconscionability doctrine to the arbitration clause. Justices Abella and Rowe wrote on behalf of seven judges, “There was a clear inequality of bargaining power between Uber and Mr. Heller. The arbitration agreement was part of a standard form contract. Mr. Heller was powerless to negotiate any of its terms. His only contractual option was to accept or reject it.” In the circumstances, arbitration was “realistically unattainable”, which left drivers with no mechanism for dispute resolution. Justice Brown went further, agreeing with the majority in result, but arguing that such clauses undermine the rule of law and deny access to justice.
The sole dissenting Judge, Justice Côté, would have allowed Uber to arbitrate in the Netherlands if they paid the $14,500 USD fee, instead of Heller.
In effect, the Court sided with Heller and struck down the arbitration clause.
Implications
This decision means that the drivers can now pursue litigation against Uber through the Ontario courts. Uber has released a statement to the media promising to amend their contract to align with the court’s principles.
It is a victory in the fight for workers of Ontario’s gig economy to achieve recognition as employees. In jurisdictions such as California, the laws now recognize Uber Drivers as employees rather than independent contractors.2