For years, Uber Technologies Inc. (NYSE:Uber) has urged governments and courts around the word to classify its drivers as contractors, not employees.
The latter would legally require Uber to uphold specific employment standards. In B.C. for example, the ride-hailing company might have to pay drivers a minimum hourly wage that is scheduled to rise to $15.20 in June.
As it faces a potential $400 million class action lawsuit in Ontario on the issue of driver classification, Uber last month announced what it called a modern approach to supporting app-based workers.
The plan asks that provinces require Uber, Lyft, Inc. (Nasdaq:LYFT), SkipTheDishes and other app-based companies to provide workers with self-directed benefits. According to Uber, this “flexible work” approach would allow drivers and delivery workers to withdraw cash for dental care, tuition, registered savings accounts or other benefits they choose to fund.
A legal requirement to support certain kinds of worker benefits would potentially allow Uber to fund those benefits without disrupting their business model or changing the nature of the company's relationship with its workforce.
“To have Uber say, ‘We’re going to give money to our folks for benefits’ – it sounds like it’s maybe just extra money,” said Fiona McFarlane, a Vancouver-based lawyer with Kent Employment Law.
If a company begins offering benefits directly to an independent contractor, that company is going down the “slippery slope” of potentially changing an independent contractor relationship into an employee-employer one, McFarlane said, adding that courts have applied a legal test for evaluating whether someone who is called an independent contractor may in fact be an employee.
McFarlane also questioned Uber’s proposal that provinces mandate the provision of certain benefits.
“I think being mandated to do something … does give people a lot of comfort sometimes because then they can say, ‘Look, we didn’t change the employment relationship, we were mandated to do this,’” she said. “But it’s a bit of a false protection, because in this instance, I don’t know how they would require that.”
Since this article was first published in print, BIV connected with Uber about their approach to flexible benefits.
“Canada's current employment system offers benefits and protections to some, and not for others. We are committed to working with provincial governments, to help create a better future for app-based work," said Andrew Macdonald, Uber’s senior vice-president of global rides and platform, and the company's most senior Canada-based executive, in a statement provided to BIV.
Uber plans to work with provinces on requiring all platform companies to establish flexible benefit funds, and supply their workforce with safety tools and training.
Adam Walker, B.C. parliamentary secretary for the new economy, is working on a strategy that will develop better employment standards for workers in B.C.’s gig economy, according to the Ministry of Labour. This includes exploring the feasibility of benefit and pension plans for those who do not otherwise have coverage.
One of WorkSafeBC’s key research priorities for this year includes “adapting to the changing nature of work,” with a focus on gig economy workers and precarious employment.
“We have seen the evolving nature of the modern economy, modern workplaces. It has created challenges, both for business and for workers, and I think we as a government have a responsibility to ensure there’s a balanced approach to this to ensure that those workers enjoy the same rights and protections as any other workers, and that businesses continue to grow,” B.C. Minister of Labour Harry Bains told BIV.
The ministry confirmed by email that any new programs or proposed changes will be developed in consultation and collaboration with industry and labour organizations.
Pre-pandemic, non-standard work – which includes part-time, temporary, contract and self-employed work – accounted for approximately one third of employment in Canada, according to the federal Report on the Expert Panel on Modern Federal Labour Standards.
When employees are misclassified as independent contractors, “sizeable costs and risks are shifted onto workers who are deprived of labour standards protections,” the report states.
It noted further that the flexibility afforded by a contractor workforce – the ability to quickly expand or contract a workforce with relative ease, and without the costs of hiring and firing employees – benefits companies, perhaps to the detriment of workers, who consequently have little job security.
“There’s a lot of evidence that we saw that there’s people being called independent contractors who are really employees and should be coming under the same protections as other employees,” said Craig Riddell, professor emeritus at the University of British Columbia’s Vancouver School of Economics.
That kind of misclassification creates a number of problems, said Riddell, who served on Ottawa’s expert panel on modern federal labour standards. It isn’t fair to workers, who are denied certain protections because they aren’t classified as employees. But it is also unfair to other employers.
“Employers who are doing this are, in a sense, able to undercut what I might call legitimate employers who don’t pretend that their employees are contractors,” Riddell said. “If their only source of competitive advantage is that they’re not paying payroll taxes and the other employers are paying them, that’s not really a legitimate source of business.”
The panel’s 2019 report made a number of recommendations on employment and labour standards that fall under federal jurisdiction, including defining the concept of an employee under Part 3 of Canada’s Labour Code, and launching a pilot project to address issues related to misclassification.
The online version of this article was updated to include new comments from Uber Canada.
