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September 8, 2015

Uber: What the relationship between Uber, taxi companies and their drivers can teach us about employment law


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Guest post by Emily Burke

The California Labour Commission recently deemed at least one Uber driver to be legally considered an employee rather than an independent contractor, despite Uber’s insistence that their drivers are the latter. Though Uber drivers pick up passengers and are paid to take them to their destination, the company argues it is not a taxi company but that in fact it is a technology platform that responds to demand by matching drivers with passengers. Uber’s business model was designed with the intention to treat the drivers as independent contractors because having employees means taking on hefty costs and responsibilities.

On September 1, 2015, a California judge certified a class action by current and former drivers against Uber, which suggests that the issue is not going away any time soon. The expense is significant enough that if California’s findings were to ripple across other cities and outposts of the company, Uber’s entire profit structure could be compromised and prices may rise for customers.

Though this would be a blow to Uber users everywhere, employment laws are in place to maintain a fair relationship between employer and employee. For example, Canadian employment law states that just because a company refers to a person as a contractor rather than an employee, the courts may find otherwise.

“In Canada, decision makers often look beyond the paperwork to see if someone is an employee,” says Marcus McCann, associate lawyer at Millard & Company. Courts in this country are careful to take a broad look at the relationship between the employer and the worker. “Important factors include, who sets the hours of work, who owns the tools, whether the work is performed on premises, whether the employee/contractor has other clients.”

As for Uber, it’s not cut and dry, explains McCann. “The cars are owned by the drivers, and they don’t have set hours of work. They accept the risk of not getting fares, and the potential to earn a profit. Those all suggest a contractor relationship. On the other hand, the tariffs are set by Uber, there are Uber policies which govern the drivers’ working lives, and many drivers have no other “clients” – their only contract is with Uber. That sounds like employment.”

To complicate matters further, Uber is in hot water already in Toronto where 36 of its UberX drivers have been fined for operating a transportation vehicle without a license. Also, City Councillor Jim Karygiannis called out Uber drivers for not charging HST. If indeed they are independent contractors, they need to be making federal HST payments, argues Karygiannis. The Uber case and the way that it evolves in the comings months and years will be one to watch. Any company or contractor that sees similar holes, trends and grey areas in its own employment relationships will want to not only follow Uber’s story, but also consider consulting legal counsel to be clear on where they stand.

“The bottom line is that, if you signed a contractor agreement, that’s not the end of the story,” says McCann. “As a result, employers may want to have a chat with their lawyer before imposing discipline or dismissing the worker. And for workers – especially long-term workers – the takeaway is that they may be entitled to more than they think, especially at the end of the relationship.”

Millard & Company specializes in employment law and has represented both employers and employees in many legal cases.

[Photocredit: SAiM, used under a Creative Commons licence]

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