Uber Class Action Wins Right to Proceed: SCC

Written on behalf of Peter McSherry
An Uber Eats delivery person on a bike representing the arbitration clause in Uber driver contracts that the SCC struck down
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There has been a flurry of news about a recent Supreme Court of Canada decision released this week involving Uber and a proposed class action commenced by one of its Uber Eats drivers. Yes, the driver was successful in the case but before all Uber drivers in the province pop the champagne, let’s take a look under the hood to see just what did happen here.

A Word About Class Actions

A class action allows a representative plaintiff to go to court and seek damages on behalf of the “class” as the court will define membership in the lawsuit. If you are a possible member of the class, you can always “opt out” and sue individually. The idea behind the concept is to allow a lawsuit to proceed where the sum claimed often makes no sense for an individual to take on the case themselves. The legal fees of the successful class are always based on a percentage of the result and must be approved by a judge.

The representative plaintiff must be careful as they may also be responsible for the costs of the defendant, should the case fail. There is a fund set up by the Law Foundation of Ontario to insulate representative plaintiffs in order to encourage actions to move forward. The proposed case must be first be approved by the Foundation executive.

The first step in a class action is to be “certified” or approved by a judge. None of these steps have been yet been taken in this case. This most recent victory will simply allow the matter to proceed to the certification stage.

Mandatory Arbitration Generally

Often employment or other types of contracts may contain a term that requires any dispute about the agreement be decided by a third-party neutral arbitrator.  There are pros and cons to this concept, which we have previously discussed in prior posts.

One big advantage offered by arbitration in the company’s favour is that such a clause effectively ends the prospect of any class action remedy as each case must proceed on its own to arbitration.

It is important to keep in mind, however, that in employment law issues, an agreement mandating arbitration cannot legally take away the individual’s right to claim the statutory minimum employment rights, nor can it eliminate human rights remedies.

The Uber Case: A Contract of Adhesion

We have reviewed this case previously, here and here.

The issue, in this recent decision, was limited to the arbitration clause contained in the contracts Uber entered into with its drivers, requiring them to bring complaints to an arbitrator in the Netherlands at considerable expense. Uber was attempting to enforce the clause in order to prevent a class action from proceeding aimed at classifying drivers as ’employees’ rather than ‘independent contractors’.

When a contract is given on a “take it or leave it basis” with no room for negotiation, it is called a “contract of adhesion”. A good example is a disability or life insurance agreement. Try calling up an insurance company and telling them paragraph 15.2 is not to your liking and see how far you get.

It is one of the issues to be considered when the ‘little guy’, such as an Uber driver, is protesting the terms of the contract as being grossly unfair or in legal-speak, “unconscionable”. The agreement in this instance was indeed found to be such a “contract of adhesion”. The term mandating arbitration in a foreign country was seen as unfair, as drivers were required to pay the arbitration costs equal to roughly one year’s gross compensation and pay their own travel costs to Holland. Ouch.

For this reason, the Supreme Court decided that the arbitration clause was a no go and declared it illegal.

I am an Uber Driver, What Do I Get?

Precisely nothing. You do have the right to protest any unfair treatment by going to the Ministry of Labour yourself to seek relief under the Employment Standards Act such as vacation pay, paid statutory holidays, COVID-19 leave rights or any other statutory protections including termination and severance pay.

There are no adverse costs against you if you choose to proceed to the Ministry. You need not join the class action.

Employee Status

To succeed in this application, however, you first need to be declared an employee. This is what the class action is trying to do. A class action, however, is a cumbersome and slow procedure for this process. If you are found to be an employee, you will be entitled to immediate payments of vacation pay and statutory holidays (including retroactive pay) and for as long as you remain “employed”.

By the time the class action is or is not certified, your case before the Ministry will easily be over and done.

Are Rideshare/Delivery Drivers Employees?

This is a tough case. Don’t count on a win here. Uber drivers have considerable autonomy with respect to the decision work or not on a given day. Uber will not call you to ask for a doctor’s note to justify not working on a particular day. The “degree of control” over the worker is a big factor in these types of cases. Consider also that Uber will let you sign off anytime and pick up fares for direct competitors. This is a big factor in favour of finding drivers to be independent contractors.

Human Rights

If you are an Uber driver and feel that you have been treated unfairly due to a protected human right such as age, gender, sexual orientation, disability, religion being the popular rights, you will see that the definition of “employee” is a much lower bar and will likely succeed, as far as jurisdiction is concerned.

Get Informed, Stay Current

Often the news media do not present the results of court decisions with clarity. While this case is a significant step forward in allowing the class action to proceed, it is still a long way off from a major shift in how rideshare drivers are classified. We will continue to provide updates on this case as it moves forward.

If you have questions about your employment status or other workplace matters, contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.