Uber’s California ballot initiative a ‘middle ground’ for employee/contractor classification: lawyer

Prop 22 gives drivers minimum employment standards

Uber’s California ballot initiative a ‘middle ground’ for employee/contractor classification: lawyer
Alexandra Monkhouse, Monkhouse Law Employment Lawyers.

As the question whether Uber and other ride-share drivers are employees or independent contractors remains ambiguous in Canada, an election-night ballot initiative from California might be a middle ground worth exploring between gig-workers and Big Tech, says Alexandra Monkhouse.

On Nov. 3, California voters passed a ballot measure exempting ride-share companies such as Uber and Lyft from a new law – Assembly Bill 5 – that would have forced the ride-share companies to classify their drivers as employees and not independent contractors, making them eligible for minimum wage, overtime and other benefits. The App-Based Drivers as Contractors and Labour Policies Initiative, also known as Proposition 22, was the most expensive ballot measure in California history, according to Ballotpedia. Uber, Lyft, DoorDash and other gig-employers put up $200 million.

In exchange for the exemption, Prop 22 puts a floor on driver earnings by guaranteeing they will make at least 120 per cent of the minimum wage while on the clock. Drivers will also get a healthcare subsidy consistent with requirements under the Affordable Care Act, occupational accident insurance, compensation for vehicle expenses and protection against discrimination and sexual harassment.

“Prop 22, in Canada, may translate into a legislative acknowledgment that while delivery workers may be independent contractors under the current law, they should receive certain minimum protections, similar to what Uber managed to get passed in California,” says Monkhouse, a lawyer with Monkhouse Law Employment Lawyers.

“This proposition shows that network companies can provide some minimum standards and are willing to do so.”

Prop 22 does not apply to all gig-workers, which would include many highly paid IT professionals, for example, adds Monkhouse. The law is directed towards drivers for app-based ride-share and delivery platforms.

Monkhouse represented Don Valley Community Legal Services, an intervenor on Heller v. Uber Technologies Inc. The Supreme Court of Canada decision from June was a preliminary stage in a $400 million class action initiated by an Uber Eats driver, who argues the company’s drivers are employees, not independent contractors. Uber had an arbitration clause in its contract with drivers that required disputes be dealt with in the Netherlands, for a US$14,500 fee. The SCC ruled the contract was unconscionable.

A former tax lawyer at Davies Ward Phillips & Vineberg LLP, Monkhouse joined Monkhouse Law in 2019. In the last year, the firm has initiated more than 10 class actions arguing for minimum employment standards and against the misclassification of employees as contractors, Monkhouse says.

Employee and independent contractor gig-worker classification is still ambiguous in Canada. To get companies to find the kind of “middle ground” represented by Prop 22, the Ontario Government first should clarify the law, she says.

“So maybe it would be helpful if the ministry were able to investigate and clarify what their position is. Maybe that would push things forward In Ontario,” she says.

In Canada, it is caselaw and not a clear definition in the Employment Standards Act which determines who is an employee versus an independent contractor. The 2001 SCC case 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. established the Sagaz test. The determining factors are: whether the worker has their own equipment, whether the worker hires their own helpers, the extent of financial risks taken by the worker, the degree of responsibility for investment and management held by the worker and the opportunity the worker has to profit from the performance of their tasks.

Better than the test would be a law, says Monkhouse.

“A clear definition of what an employee is would be helpful to put in, in the Ontario Employment Standards Act,” she says.

She adds that legislative change is a difficult process and the Province still has many tools on the books with which to handle misclassification.

“What would be most necessary would be to hire more labour inspectors. If we were able to have more complaints processed in the system and more systemic issues dealt with at the Ministry level, I think that's going to result in better compliance,” says Monkhouse.

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