The various legal challenges which Uber Technologies Inc. has faced in Canada and else have continued in recent months, with Ontario’s Superior Court of Justice deciding in August 2021 to certify a driver class action which focusses on whether or not Uber’s workers have been improperly misclassified as independent contractors. While the decision does not result in any immediate liability for Uber, it is part of an ongoing series of developments where employer-like obligations are being imposed on gig economy operators.

The Uber Ontario class action ruling is part of litigation which was commenced in 2017, pursuant to which a group of Uber drivers and delivery workers filed a claim seeking $200 million in compensation plus a further $200 million in punitive damages. The group has claimed these damages through representative proceedings on behalf of thousands of people who have worked for Uber pursuant to Service Agreements with Uber. These Agreements are required in order for the Uber drivers and delivery persons to access the available driving work offered through the applications which Uber has developed and operates.

The core allegation in the case is that Uber has improperly (and knowingly) misclassified the workers as independent contractors, all in an effort to avoid the obligations associated with an employer/employee relationship. The claim also alleges that Uber has breached various statutory requirements relating to hours of work, overtime and compensation, all as provided for by the mandatory provisions of Ontario’s Employment Standards Act, 2000 (the “ESA”). There are also related allegations that the workers should be benefitting from the contributions required as part of the Canada Pension Plan and Employment Insurance regimes.

Uber’s defence is that legal criteria associated with establishing an employment relationship do not exist in this case. In particular, the plaintiffs provide their services to customers (and not Uber) as independent contractors, with the Uber apps simply being a tool used to arrange for this work. Uber has also emphasized that the work assignments and related requirements are not like employment arrangements, in that they are flexible and do not impose obligations to work. Thus, Uber says the role of Uber is essentially limited to being a software provider who facilitates payments, as opposed to being the party who directs or manages employees.

In the most recent decision, the Court was asked to consider whether or not to certify the claim by the plaintiffs as a class action.

Ontario’s Class Proceedings Act provides that class actions will be certified by a course when the following criteria are satisfied: (1) the pleadings disclose a cause of action; (2) there is an identifiable class of two or more persons that would be represented by a representative plaintiff; (3) the claims of the class members raise common issues of fact or law; (4) a class action would be the preferable procedure; and (5) there is a plaintiff who would fairly and adequately represent the interests of the class.

In this specific case, the Court agreed that all five of these criteria were present, so the class was certified. The Court disagreed with Uber’s argument that each of the case for the thousands of relevant drivers needed to be assessed on an individual basis. Instead, all of the plaintiffs were held to share the common issue that they had each signed the Service Agreements and used the Uber apps. As a result, the Court found it to be properly a common issue for any trial judge to determine whether or not a worker engaged under these circumstances was an independent contractor or employee. In other words, the common question facing the claims by all of the plaintiffs is whether or not Uber has, by virtue of their role in the development of the work opportunities and technology, the obligations associated with being an employer.

Many commentators have heralded this decisions as an unqualified victory for gig economy workers. It is important, however, to take a more balanced view of the Court’s decision on the certification motion. A specific issue determined in Uber’s favour was to dismiss a portion of the claim relating to allegations of unjust enrichment and negligence. These to “extra” claims were rejected because of close analysis of the legal theory of the case, which is really confined to being a breach of contract claim. Given this success in having the case narrowed, Uber and other similarly-situated organizations can take at least some comfort in the finding that their likely exposure in these types of cases is limited to compliance with ESA requirements. In other words, there is at least some support here for the proposition that it is not improper to proceed with work arrangements in an environment where the precise legal rules are either ambiguous or still being developed.

The Court also found that the allegations relating to punitive damages, which can be payable when the conduct of a party warrants punishment, was not certifiable as part of the class action proceedings in this case. There was no factual basis to the allegations that Uber had acted in a manner which was outrageous or warranted punishment. Put differently, the case involves something closer to “just business” as opposed to an intention campaign to punish workers.

A further, and perhaps even more crucial determination in the case is the Court’s finding that damages for members of the class could not be aggregated. Like similar class action laws in Canada, Ontario’s legislation permits a court to rule on damages on an aggregate and class-wide basis in situations where those damages can “reasonably be determined without proof by individual class members.” In the case of Uber drivers, the Court held that the case of each individual worker requires a unique assessment of the circumstances of the case. In other words, even if a worker in the class might be an employee (which has not been determined), that does not then immediately mean that the damages payable to that worker could be determined on a class-wide or formulaic basis. As an example, the worker may have already been paid enough compensation to comply with the ESA, and thus they have a case “in name only”. Conversely, so workers might have substantial amounts owing. However, all of this could only be determined, said the Court, by having each of the individual cases reviewed on their own. One practical point to note here is that the use of the Uber apps may be of at least some assistance in streamlining any such process, should that eventually be required.

Key Points for Employers

While this latest decision involving Uber workers is significant, it is likely too early to call it a monumental change in employment and class actions law. The certification of a class action is a procedural ruling which may assists plaintiffs, but it does not involve any substantive findings in the case. The merits of this particular case have yet to be determined, so the class action may ultimately be unsuccessful. The ruling is perhaps more important because of the publicity it has received, and the increasing risks associated with independent contractor arrangements as a general proposition. Indeed, as part of Uber’s various initiatives in Canada and other jurisdictions, the company has essentially advocated for “employee-light” type arrangements whereby workers receive some of the benefits and protections not normally provided to contractors, but with the arrangement falling short of full employee protections. All these developments are likely to encourage further discussions, possibility for law reform, and litigation in the near term.