Front Burner - Canada’s top court just sided with Uber drivers. What now?

Episode Date: July 1, 2020

Canada’s Supreme Court has sided with a former Ubereats driver in his quest to pursue a class action lawsuit against Uber. At the heart of that lawsuit lies a long-standing question: Should drivers become employees or remain, as Uber maintains, independent contractors? The latest ruling opens the door for that question to be answered - and with that, the potential for drivers to secure benefits that they are not entitled to right now. Today on Front Burner, we speak with labour law professor Veena Dubal on what this could mean for Uber drivers and the wider gig economy.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Josh Bloch. About three years ago, David Heller tried to sue ride-sharing giant Uber. Heller was a driver for Uber Eats in Ontario,

and he believed he should earn things like minimum wage and overtime and vacation pay. Heller wanted to be seen as an employee and not as an independent contractor, which is how Uber classifies workers. Up until a little while ago, I was actually making quite a bit of money, paid off quite a few of my debts. Uber had decided to change the way it compensates its drivers, not just Mr. Heller. And obviously many were very upset by that. He wanted to take up this issue in a class action lawsuit, but Uber argued that it couldn't be sued in an Ontario court.

Heller's only recourse? Quit or travel all the way to the Netherlands at a personal cost of $20,000. They chose the Netherlands because it was convenient for Uber. They did not even try to suggest somehow that they thought that that would be accessible or appropriate for their drivers. Late last week, that changed. Canada's highest court has sided with drivers in a case involving Uber.

The Supreme Court of Canada ruled that Uber drivers can settle their disputes through Ontario courts. And as a result, opened up the door for David Heller's class action lawsuit to be heard. Today, we'll talk about the impact of this ruling, not just for Uber drivers, but the gig economy more widely. This is FrontBurner. Joining me now is Veena Dubal.

She's a labor law professor based in Silicon Valley and a gig economy expert. Hi, Veena. Hi, thank you for having me. Well, I want to start by asking you about the specifics here. At this point, how does this ruling actually change things for Uber drivers? Like, let's say if they have a complaint against the company, how can they go about addressing that now? They can go about addressing it like they were intended to address it. They can go to an administrative body or to a court of law, so to a public court instead of a private venue, and have their dispute adjudicated. Uber drivers can settle labor disputes in Ontario courts,

not through a costly foreign arbitration process. You know, I think that what is so complicated here for people who don't watch these issues to sort of grapple with, to really understand the importance of this issue, is that, you know, this decision doesn't decide whether it economy workers or employees or independent contractors, what it does is it allows the question of their legal status to finally be seen in a public court of law, which is something that Uber, you know, almost 10 years into their existence has fought back against and prevented. The Supreme Court decision acknowledged this

power imbalance. Justices on the high court say there was clearly inequality in the bargaining power between Uber and Heller. And it went on to say that Mr. Heller was powerless to negotiate any of its terms. His only contractual option was to accept or reject it. It was the first high court ruling I had seen in the Western Hemisphere in the last two decades that really got at the reality of the lives of workers and consumers in relationship to large corporations. It was really a welcome return to the rule of law. It's about every worker in this country that now knows that no matter what, their rights cannot be taken away from them. A big achievement for Canada.

For the past, since at least the 1980s, in the U.S., and I believe in Canada as well, there's been this growth of a legal environment which hides behind contracts to favor businesses and corporations. And in particular, there's this idea that corporations can sort of put pressure on workers and consumers to sign adhesion contracts, you know, these boilerplate contracts that oftentimes we don't even know we're signing, but we just have to click on in order to get to work or to get the product. And there is a lack of bargaining power, a lack of equality between these two parties who are supposedly, you know, negotiating together to agree on contractual terms.

So CBC News actually received a statement from Uber. A spokesperson for the company said that it's going to amend its contracts to align with the court's principles. It said specifically, quote, Going forward, a dispute resolution will be more accessible to drivers, bringing Uber Canada closer in line with other jurisdictions. And then it went on to say, we are proud to offer a flexible earning opportunity to tens of thousands of independent drivers throughout Ontario. Just tell me a bit more about what these amendments mean.

I think what they're saying is that they are going to have to change the terms of their arbitration agreement in order for it to be valid, in order for there not to be this sort of inequality of bargaining. And so, you know, I think Uber's PR statement there sounds more rosy than probably their feeling, because what this decision means is that their business model is going to be put to the test. There's going to now be a lengthy and vigorous fight in the lower court, and eventually will come up on appeal in the Supreme Court, I'm sure, on whether or not the drivers are employees or independent contractors. And they will continue to argue, as they have in the United States,

that if the drivers are employees, that means that they cannot have flexible work. And you sort of already saw a hint of that in that PR statement, which in the U. US, we've been we've been arguing, advocates have been arguing that that is just that's just not the case. There's nothing about employment that that that takes away flexibility. Well, I know, I want to ask you more about that in a moment. But on this question of dispute resolution, I mean, you've spoken to many Uber drivers, and I'm curious to know, what are the kinds of without any sort of recourse, without knowing why they were term any legal ground just to ask them or like to deal with them. Just if they don't want you, they just take you out of the system. We have no rights, no way to address injustices or unfair treatment.

We have no way to negotiate fair pay. I think the two things that especially have come to the fore during this pandemic with drivers in the United States being determined to be essential workers and still working. They're not giving them protective equipment, but also they're not providing benefits. Putting their lives on the line is the reality that they can go out, drive for 16 hours and actually lose money. A lot of the jobs in the gig economy are people that are working double jobs and that are supplementing their income from other sources.

There will be no benefit. This way I better work, go back to my profession, which a mechanic engineer, I can make a lot more money. We're working hard for Ubers, but we don't feel that we are employees. So drivers regularly tell me, for example, that, that, you know, they'll think that they made maybe $400 a week in a particular week. But then when they sit back and think about how much money they spent on gas, how much money they spent on the wear and tear for their vehicles, how much money they spent on insurance, that they've actually lost money over a period of time. But like many poor people, they can't afford to think about how much money they've lost over a period of time because they

need money immediately to pay their debts, their immediate debts. So they're stuck in this cycle. Well, and you mentioned that this Supreme Court decision will open up a legal battle around this question of are Uber drivers, are they independent contractors or are they in fact employees? Can you tell me more about why that matters? What why is that distinction so important? Yeah, so in the last century, basically all over the world, we had the growth of employment protections. And, you know, what

things that are have become sort of every things that we take for granted, perhaps, like the minimum wage or unemployment insurance or workers compensation, overtime protections, these things were hard fought for wins from the labor movement, right? People died to get the minimum wage, they died to get overtime protections passed into laws. to get overtime protections passed into laws. And in order to sort of weasel their way out from having to pay workers, you know, literally just pay a minimum wage, since the 1970s, corporations have grown this idea of the independent contractor. Now, there is such a thing as an independent contractor, you know, there's the independent craftsman or the the plumber who has is a sole sole proprietor or a business person who actually um is is truly an independent contractor but businesses have sort of taken advantage of of this idea um to say that

oh they actually don't employ workers they employ small business people. And so Uber and the gig economy have become emblematic or most symbolic of this phenomenon. And Mr. Heller realized at that point that the only way he would have the ability to oppose this or to have any rights is if in fact he was deemed to be an employee, because employees have rights. Right. I mean, Uber makes the argument that it's not a transportation company, it's a technology platform, and that the drivers should be seen as consumers of this technology app, that, you know, Uber provides this platform that drivers can then, you know, make their own hours, they can work independently, they drive their own cars. Many of our drivers have moved from traditional jobs, and they've chosen to work with Uber because of that flexibility.

The fact that you can work literally whenever you want. Tell me a bit more about Uber's position on this. What is their argument that drivers are, in fact, independent contractors? It is exactly as you stated. They've made this argument all over the world. Today, drivers have control over when, where, and how they work. So as you can see, we're not arguing for the status quo. Our proposal avoids the potential harm of forcing drivers to become employees,

whether they want to be employees or not, and the vast majority tell us that they don't want to be employees. I'm not interested in working for Uber as an employee. As a co-contractor, yes. It's because the tax rules change and I don't see the benefits. Of course that flies in the face of Centrally, Uber directs how much drivers can make. Drivers aren't negotiating or setting their own fares for individual passengers. They have not had the opportunity to negotiate with Uber what percentage they get from those fares. Uber directs drivers' interactions with their customers. They direct when vehicles are appropriate for drivers to use.

They monitor their driving habits to the smallest detail through the use of GPS technology. All of that data is collected and analyzed and presented to the drivers in their apps. They exert significant control over termination and promotion processes. I mean, you know, I could go on and on. In fact, you know, something that I have argued is that not only is Uber clearly an employer, but they are a hyper employer. They actually control much more through their algorithms than a normal employer in the service economy would control. And so, you know,

it'll be interesting to see what kinds of changes they try and make in the Canadian market to get out from underneath Canadian law. So they're probably going to try and back off some forms of control in order to try and prove that they actually have independent contracting drivers and not employee drivers. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people, and I have some startling numbers to share with you. 20 years. I've talked to millions of people and I have some startling numbers to share with you.

Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. So, Veena, this is one of several legal battles that Uber is facing around the world in California and New York and in London, right? Right. This is correct. And they're all kind of they're similar and different. Almost all of them turn on employment status. Uber has agreed to settle two class action lawsuits brought by its drivers. One was started in Massachusetts, the other in California,

where drivers sued to be considered employees. On Friday, a London court upheld a ruling that Uber needs to treat its drivers like full employees by providing benefits and a minimum wage. treat its drivers like full employees by providing benefits and a minimum wage. And so it's sort of an existential moment for the company. In California, it's fascinatingly not a class action lawsuit, but actually an enforcement lawsuit brought by the state itself. So the California attorney general just a few weeks ago, alongside some city attorneys in the major cities, San Francisco, Los Angeles and Sacramento. I'm sorry, in San Diego have filed a lawsuit against Uber and its competitor Lyft, saying that these companies are misclassifying their workers under California

law. But Assembly Bill 5, this is the bill that was passed in California that requires Uber, Lyft, and other sharing economy companies to classify their workers, their independent contractors as employees. And they've really been pushed to that, to do that, I think, again, because we're in a pandemic

and workers are in such precarious situations. There's this outbreak and they have to put essentially their lives in danger to be these essential workers. But it is very, it is kind of a coincidence, an interesting coincidence that all of these battles are coming to a head at the same time internationally. And I think that this business model is finally going to see the kind of challenge in court that we really should have seen eight years ago.

Well, you just described this as an existential moment for Uber. What do you mean by that? What's at stake for the company? So Uber has never been profitable. And it has really relied on essentially subsidies from, from venture capitalists to create a monopoly, in which they would eventually try and raise prices. That's sort of been their longterm business model. They were dependent in even in that long-term vision in which eight years and they still haven't been profitable. They have been dependent on the idea that they could pay workers less than a minimum wage

and not pay into safety net benefits, not provide safety net benefits. That's they've been sort of dependent on that idea. And then the question becomes, well, if they haven't been profitable and they're forced to increase their labor overhead by one third by treating their workers like employees, will they ever be profitable? And if they won't ever be profitable, then they need to either drastically rethink how they do business, perhaps raising prices, or they need to get out of business. And so I think it is truly an existential moment. moment. You know, we're used to this kind of super convenient and cheap form of transportation or food delivery. But are you saying that that is entirely premised on having access to this cheap

and flexible labor by classifying the drivers of Uber as independent contractors. Yes, I am saying that. But I want to say, I want to point out that Uber will say eventually when they start raising prices, they will say, oh, we had to do this because we have to pay our workers more. The labor unions are forcing us to pay our workers more. The labor advocates in the state are forcing us to pay our workers more. And therefore, you know, consumers, this cheap, easy ride that you get is, is going to be more expensive. But the truth of the matter is,

is that they no matter what, even if they continue to pay their workers below a minimum wage, they are going to have to raise prices, because they are not profitable. And they have never been profitable. So prices are going to go up no matter what. And I think it's going to be important to keep an eye on the way that they talk about the rise of prices. And to what extent is this question and this sort of legal struggle playing out in other companies in the gig economy? It's the same exact legal struggle. So in 2016, we saw a growth of class action lawsuits in the gig economy. And you saw some venture capital money move away as a result from this sort of entire model where you have a technology platform that proliferates independent contractor work while also acting like an employer. And, you know, all of these companies are all over the world. Ola, Foodora,

all of these companies in the global South and in the West are, are reliant on this independent contractor model. And so I think, I think the sector that we've seen grow quite precipitously is going to, over the next few years, see a dramatic shift. I mean, we saw what happened here with Foodora. Out of the blue this afternoon said, hey, we're pulling out of Canada. This is a German company, but said they'll be done in Canada. Where, you know, just months after its workers had successfully pushed for unionization,

the company shut down. This announcement now comes only two months after the Ontario Labor Relations Board ruled that those Foodora couriers could unionize, calling them independent contractors. And I wonder what that says. I mean, does it mean that the gig economy itself cannot survive these kinds of changes? That could the gig economy function in the way it does if workers are seen as employees and receive the kind of pay and benefits that employees do receive? You know, I think that the answer to that question is yes. I think that the answer to that question is yes.

Foodora's leaving Canada, to me, is not so much a signal that they could not operate with a unionized workforce. I think it's a signal that they do not want to operate with a unionized workforce. So it is an act that is meant to deter regulators and workers elsewhere. In a statement, Foodora says, in part, there are many reasons why we don't believe Fedora riders need a union to affect change. The message is, look, if you try to get more than what we're willing to give you, we're going to take away the work entirely. And for Fedora, Canada was a small enough market where they could do that without really hurting themselves too badly. But in the case of Uber, you have Uber facing the same question in some of its largest markets, including New York and California. And so I'm skeptical that they can or would do the same thing.

Veena, thank you so much for your insights into this. Oh, it's been a pleasure. Thank you. Some news before we go today. The federal government has extended the ban on most travelers from the U.S. until July 31st to stop the spread of COVID. The order prevents entry into Canada by anyone who is not a citizen, permanent resident, or American traveling for essential reasons. The government is also extending its quarantine rules until the end of August.

Travelers returning to Canada from abroad must continue to isolate for 14 days once they arrive. This comes at the same time that the European Union agreed to let some tourists enter its country starting tomorrow. Canada is one of 15 countries that is deemed safe by the EU. That's it for today. I'm Josh Bloch. Thanks for listening to FrontBurner.