B.C. laws lag behind fast-rising gig economy

On-demand work requires stronger employer protections, lawyers say

Geoff Mason, a lawyer at Kent Employment Law: a fine regulatory balance is needed to support gig-economy employers and protect its workers | Submitted

"The gig economy is real,” said Rocky Ozaki, vice-president of the BC Tech Association and co-founder of Now! Innovations. “Work in 20 years will not be the same as it is today.”

Part of the challenge is defining that new economy’s scope, its reach and its implications for economies around the world.

Research by software company Intuit Inc. estimates that by 2020 7.6 million Americans will work in the U.S. gig economy. In three years, around 2.3% of the U.S. population will be seeking out temporary, flexible gigs as on-demand workers, independent contractors and consultants. As Canadians follow suit, the Uberization of even a fraction of the B.C. workforce raises complicated legal questions.

“The bottom line is that the way the employment standards protections are structured currently, they did not have this economic concept in mind,” said Geoff Mason, a lawyer at Kent Employment Law.

When the B.C. Employment Standards Act was enacted in 1980, companies like Lyft and TaskRabbit weren’t even dreamed of.

“They weren’t designed at a time when you saw a proliferation of independent contractors in an economy that really promotes the independent-contractor model in the way that it does right now,” he said.

In B.C., the classification of workers highlights a critical distinction. An employee – which is defined differently from statute to statute – is generally someone who holds employment for an ongoing duration, who works exclusively for an employer and whose work is dictated by that employer, said Elizabeth Reid, an employment and human-rights lawyer at Vancouver-based Boughton Law.

Employees are entitled to certain rights and protections under the Employment Standards Act and the Human Rights Code. But those same protections are not extended to independent contractors, which leaves a growing population segment vulnerable.

“As the law stands, they’re not very well protected, because it’s only people who fall into that real definition of employees who are entitled to things like notice or severance on termination. Only employees get employee insurance, maternity leave, parental leave, minimum wage,” explained Reid.

Add to that contributions to the Canada Pension Plan, employment insurance and workers’ compensation, along with income tax collection and remittance, and overall, a shift to gigs marks a shift in responsibility from employers to workers.

Reid said that gig-economy contractors will have limited to almost no protection “except to the extent you’re able to bargain for it yourself. And then it’s going to depend on what’s the relative strength of the parties in terms of bargaining.”

As a result, she predicts, workers with in-demand, highly specialized skills will garner an upper hand in work negotiations. Those offering more general services – rides, for example – will likely be relegated to competing in a more saturated market. Without clear regulations, wages become susceptible to the uncertainty of supply-and-demand economics.

While legal advice could also bolster a worker’s contract negotiations, Reid admits that it’s likely out of financial reach of many would-be gig workers. 

Mason said that given the rapid development of the gig economy, B.C. laws are “ripe for being re-evaluated right now. But there has to be a pretty extensive amount of work done into really carefully crafting the regulations involved” – for independent contractors, as well as for employers.

Last year, a U.S. federal judge rejected a potential US$100 million settlement offered by Uber to litigating drivers in Massachusetts and California who claimed they were misclassified as independent contractors. The deal would have required drivers to keep their contractor designation and remain without the benefits that would be afforded employees in either state.

Generally, the suit, which continues to face legal challenges, offers a warning to employers. In B.C., providing contractors certain benefits, or pushing business costs to contractors – issues that are part of the argument made by plaintiffs in the Uber class action – could be used to make a case for misclassification. According to Mason, the consequences could be “really, really drastic,” with employers on the hook for unpaid taxes and contributions.

But the legal fight also suggests that if states or provinces want gig-economy employers and their innovative services, they should consider regulations that don’t make certain business models impossible.

Protecting worker rights and promoting cost-effective innovation is a complex balancing act, Mason said, that considers what’s “best for the economy, but also what’s best for the workers.”