Recently, the California Labour Commission awarded Barbara Ann Berwick, who had been an Uber driver for two months, $4,000.00 in expense reimbursement plus interest under Section 203 of the Labour Code, amounts she would not have been entitled to at California law had she been found to be an independent contractor, rather than an employee.
The decision has received much media coverage given factors such as the rising popularity of crowdsourcing businesses and the recent controversy surrounding the regulation of Uber drivers. So, how does this decision translate to Canadian Uber drivers?
Factors Surrounding an “Employee v. Independent Contractor” Decision
In its decision, the California Labour Commission noted factors such as Berwick’s inability to directly profit or lose as a result of Uber’s business activity, her inability to permit others to utilize Uber’s intellectual property, her inability to choose which rates to charge, and, to a certain extent, which vehicle to utilize as factors contributing to their “employee” finding.
These factors are ones which were considered in the oft-referred to decision in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., ([2001] 2 S.C.R. 983) being:
“1. Whether or not the agent was limited exclusively to the service of the principal;
2. Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold;
3. Whether or not the agent has an investment or interest in what are characterized as the “tools” relating to his service;
4. Whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission;
5. Whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it?”
The main issue with Uber drivers, at least from a Canadian common law standpoint, would appear to be the first Sagaz factor, given that Uber drivers are not limited exclusively to its service. Many Uber drivers have other jobs and capitalize upon the income they can generate utilizing Uber, but are not in a state of economic dependence. Wherein an Uber driver was established as limited to serving Uber exclusively, which would only be determined on a pith and substance basis alone (hours of work, etc. as there is nothing in the Uber contract which specifies exclusivity), the driver may have a chance at being found to have been an employee or dependent contractor, rather than an independent contractor, of Uber.
In consideration of the applicable case law, it seems more likely that Uber drivers would be found to be dependent contractors, rather than employees, on the exclusivity factor alone. Dependent contractors, a category of workers recognized in the McKee v. Reid’s Heritage Homes Ltd. 2009 ONCA 916 decision, are entitled to notice, but do not bear enough similarities to an employee to be considered as such. Dependent contractors’ status rests almost exclusively on economic dependence on the employer.
While U.S decisions are neither binding nor persuasive on Canadian courts, it is likely that this decision will raise awareness of the importance of employee rights and will lead to further discussion surrounding the legal determination of employees versus independent contractors.
Advice for Employers
Even wherein an employee appears to be a contractor (and frankly, even when they are labelled as same in an employment contract), they can be entitled to statutory minimum and common law notice. The determining factors, outlined in the Sagaz decision referenced in this post, will generally hold more bearing on a determination as to whether the worker is an employee than the actual label provided at the time of hire. If you are unsure as to whether an alleged contractor may be entitled to notice upon termination, or are otherwise concerned regarding the categorization of your employees, contact Monkhouse Law today for a free consultation.
Advice for Employees
As the law has continued to demonstrate, even alleged contractors may be entitled to common law notice and other entitlements upon termination. However, the decision will ultimately depend on factors surrounding your employment—notably, your dependency on your employer. If you are unsure as to whether you may be entitled to notice, or other benefits afforded to workers within the “employee” category, contact Monkhouse Law today for a free consultation.
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