With the COVID-19 economic downturn and in the wake of Uber Technologies Inc. v. Heller and the Foodora Labour Relations Board decision, many gig-workers are questioning their legal rights, and these and other factors have led to a string of class actions for Monkhouse Law Employment Lawyers, says Alexandra Monkouse.
“We’ve seen a number of catering companies coming under scrutiny and temporary employment agencies also coming under scrutiny, because people wonder if they haven’t been short-changed,” says Monkhouse, a former tax lawyer at Davies Ward Phillips & Vineberg LLP, who joined Monkhouse Law in 2019.
The rise of the gig economy and the Uber and Foodora decisions have highlighted the still-arguably-fuzzy distinction between an employee and an independent contractor. In the last year, Monkhouse Law has initiated more than 10 class actions arguing for minimum employment standards and against the “misclassification” of employees as contractors, Monkhouse says.
One example is the ongoing action against Deloitte Management Services, on behalf of workers performing document review and e-discovery services. The suit alleges the class members were misclassified as independent contractors and are entitled to employment standards minimums and statutory deductions.
In June in Uber Technologies Inc. v. Heller, the Court ruled the arbitration clause in Uber’s contract with its drivers was invalid. The clause required disputes between driver and company to be dealt with in the Netherlands, for a US$14,500 fee. As a result of the ruling, a class action brought by drivers will be heard in Ontario. The drivers argue they are employees rather than independent contractors and should therefore be entitled to benefits under the Employment Standards Act.
After Foodora food delivery couriers held a vote to join the Canadian Union of Postal Workers, the company challenged their employment status which determines their eligibility to unionize. But on Feb. 25, the Ontario Labour Relations Board found the couriers were dependent contractors and allowed to unionize. But it was a pyrrhic victory, as Foodora declared bankruptcy soon after.
“The Foodora situation also kind of outlines the risk of unionization… it was a sour victory, I would say for gig economy workers,” says Monkhouse.
As another sign of the winds shifting in favour of gig-workers, Monkhouse adds that, over the last year, she has also seen the Canada Revenue Agency intensifying scrutiny of companies for misclassifying their employees under the Income Tax Act. One example, says Monkhouse is the 2019 Tax Court decision in AE Hospitality Ltd. v. Minister of National Revenue. The court dismissed AE’s appeal and confirmed that a group of caterers deemed independent contractors by AE were employees.
“What I see is that judges now are a lot more sensitive to the idea that as somebody who is in an independent contractor agreement might actually be an employee,” says Monkhouse.
These trends – plus COVID-19 and recent changes to employment insurance – may push lawmakers to take action and more clearly define what an employee is, in legislation, she says. In Ontario, who qualifies as an employee is determined by caselaw, not through a clear legal definition in the Employment Standards Act, says Monkhouse.
Currently, caselaw defines an employee through the Sagaz test, based on a 2001 Supreme Court of Canada case 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. 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.
“We could just change the test in the court and then things would move forward… the court could decide to push the needle forward or the legislature could decide to proceed forward. Because there isn’t a real recognition of what an employee is under the Employment Standards Act,” Monkhouse says.