A proposed class action on behalf of Uber drivers seeking entitlements to minimum standards (e.g. minimum wage, benefits, overtime, holiday pay, etc.) under the Employment Standards Act (ESA) will be allowed to proceed before the Ontario Courts. The Ontario Court of Appeal reversed a lower court decision enforcing an arbitration clause. In doing so, the Court of Appeal found the arbitration clause invalid, as it sought to contract out of the ESA and was unconscionable. The Court did not address the question of whether the drivers are employees or whether the class action should be certified. Rather, the court simply determined that those issues could and should be determined by the Ontario Courts rather than through private arbitration in the Netherlands.
On the broader issues raised in this case, Uber’s position is that it does not employ its drivers and that it merely provides a technology platform that links drivers to potential customers. Uber maintains that its relationship to drivers is a commercial one and issues arising between the parties are subject to an arbitration clause that each driver must accept on the app prior to beginning work. This mandatory arbitration clause requires all disputes between Uber and its drivers to be referred to a private arbitrator in Amsterdam and subject to the laws of the Netherlands.
The Court held that the arbitration clause did an “end run” on the provisions of the ESA by forcing them to settle disputes in an expensive and far off location despite the fact that the ESA provides a more readily available dispute resolution mechanism. The ESA provides workers with a right to file a complaint and have it investigated by an employment standards officer which constitutes a benefit for employees under the Act. Since the ESA expressly prohibits the waiving of, or contracting out of, a statutory benefits, the Uber arbitration clause, which had the effect of doing just that, was ruled invalid.
The court acknowledged the importance of the issues being raised by the gig economy for all Ontarians. Determining whether individuals, in similar work as the Uber drivers, are properly considered independent contractors or employees, and, as such, entitled to the protections of the ESA has significant and increasing public policy implications. Consequently, the Court held that this important should be decided in Ontario.
The Court of Appeal also found Uber’s arbitration clause unconscionable. To dispute even the smallest issue, Uber drivers would be required to pay $14,500.00 USD up front, while shouldering the additional costs of travelling to, and staying in, Amsterdam. The Court concluded the arbitration clause presented circumstances that were: 1) grossly unfair; 2) took advantage of the Uber driver’s lack of legal advice or suitable advice; 3) underscored the overwhelming power imbalance between Uber and its drivers; and, 4) permitted Uber to take advantage of this vulnerability. On the basis of this 4-part test, the Court ruled the clause unconscionable. It is interesting to note that the Court compared the relative bargaining power of Uber drivers, in this case, with consumers. Given the implications of this case for workers in the gig economy, this will be a case to watch.
It is interesting to note that the Court compared the relative bargaining power of Uber drivers, in this case, with consumers.