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Howard Levitt: Why the Uber driver case has the potential to alter Canada’s gig economy forever

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A vast majority of people calling themselves independent contractors — and whose “employers” happily play along — are employees in the eyes of the law.

Sometimes it’s genuinely difficult to assess, but on other occasions, the distinction between the two categories is blurred because one or both parties are trying to ‘game’ the system.

A worker might wish to enjoy the freedom of being an independent contractor, which allows them to set their own schedule and gives them the freedom to complete a job as they see fit. Most importantly, the ability to make deductions for business expenses for travel, tools and even a home office for tax purposes.

An employer might also wish to call an employee an independent contractor, and even require them to sign agreements saying so, to save money by not paying minimum wage, apart from vacation, holiday and overtime pay, and more. Genuine, independent contractors can’t even claim wrongful constructive dismissal when the relationship ends.

But getting it wrong can lead to serious financial consequences, particularly for employers.

An employee who has been treated like an independent contractor, but isn’t, could bring a lawsuit and oblige the employer to retroactively pay overtime, vacation pay and more.

The employer could be required to pay large penalties, and interest on outstanding payroll deductions. Indeed, employers in Ontario could be fined by the Ministry of Labour.

Uber Inc. is a massive company that “employs“ likely over one hundred thousand Canadians.

So, when the Supreme Court of Canada’s released its Heller v Uber decision, it was potentially big news.

It could ultimately lead to massive financial consequences for Uber and alter the gig economy forever, forcing companies that rely on these workers to change their model or exit the jurisdiction as online food delivery company Foodara did when its workers in Canada attempted to unionize.

Heller was a driver for UberEats who argued that he was an employee, not an independent contractor. That meant Uber owed him overtime, vacation, holiday pay, as well as other entitlements.

The Supreme Court didn’t answer the question of whether Heller and other Uber drivers were employees or not, so in that respect the real issue lies ahead. But it did remove an important roadblock, paving the way for a potentially $400 million lawsuit.

Tucked away in the contractor agreement that every Uber driver must sign before they can start working is an arbitration clause.

The clause required drivers to bring any problems to arbitration in Amsterdam, the Netherlands, and not to an Ontario court. The arbitration in Amsterdam would cost around $14,000 in administrative fees up front, as well as the cost of transport and legal representation in the Netherlands. Something no Uber driver could even possibly afford. Take Heller himself, who earns around $400 to $600 a week for 40 or more hours of work.

The Supreme Court’s decision that the arbitration agreement was unconscionable was, therefore, no surprise. Indeed, it would have been astounding if it had ruled otherwise. After all, judges, even those at the Supreme Court, are people too. It agreed that this created a clear unfairness for those working for Uber and could never afford to fly to Amsterdam to challenge the massive tech company.

The question of whether or not Heller and others like him are employees will now be decided by an Ontario court. Heller has now had his easy win, with the real test of employment versus independent contractor status still lies ahead.

If they are employees, the cost consequences for Uber and companies like it are astronomical. The gig economy in Ontario and likely the rest of Canada would be completely reshaped as companies would have to pay workers for unpaid vacation time and public holiday pay, overtime, and severance pay.

How do you know whether you, or someone working for you, is an employee or not?

The basic test is the same for multi-billion dollar tech giants as for your local hardware store.

How much control does the company have over the worker’s activities? The more genuine, not titular, freedom a worker has to set their own schedule and choose how they will complete the job, the more likely that they are not an employee.

Can the worker hire others to do the work for them, or do they have to do it themselves? Does the worker provide his or her own equipment? As an example, it will be very relevant that in Heller’s case, Uber drivers provide their own vehicles and smartphones.

How much financial risk does the worker take on and what chance does he or she have to profit or lose money? Is there genuine entrepreneurial risk?

Sometimes, the distinction between employees and independent contractors can be almost negligible. But for employers, the costs of not knowing are too high to ignore.

Got a question about employment law during COVID-19? Write to me at levitt@levittllp.com.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.

 

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Collaboration in the Gig Economy

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September 18, 2020

Utmost Software Inc. was the judges’ pick among four workforce ecosystem technology startups presenting in a competition styled after the television show Shark Tank on Thursday. The event was part of the Collaboration in the Gig Economy virtual conference bringing together staffing firms, buyers and HR tech.

All four finalists were chosen from a number of firms to present before a panel of four judges, who picked their top startup.

Utmost provides software that enables enterprise firms to track their extended workforces, which include contingent workers, consultants, contractors and freelancers, among others. Unlike VMS providers, which are typically supplier-paid, the company has a set pricing model that is paid by enterprise firms themselves.

Utmost is also native to Workday and focuses exclusively on Workday customers. In addition, Workday is an investor in the company and Utmost co-founder and COO Dan Beck himself comes from Workday.

That relationship was one thing that caught judges’ attention.

“I like the business, it’s got a built-in customer base,” said Jai Shekhawat, one of the Shark judges. Shekhawat is also founder and former CEO of SAP Fieldglass. However, he did question why Utmost chose its pricing model when enterprise firms are more accustomed to the VMS supplier-paid model.

“I think he has a bright future ahead of him; not easy, but I wish him all the best,” Shekhawat said.

Timing, thoughtfulness and focus were also cited by the other three judges:

  • “Although there was something timely in everything we saw today, Utmost, in particular, I think is really timely to what enterprise customers, HR executives, hiring managers are trying to solve right now,” said Rebecca Henderson, CEO and executive board member at Randstad nv.
  • “All of the startups were really interesting,” said Pete Flint, managing partner of NFX, a venture capital firm. “Utmost stood out, just their thoughtfulness, their experience, their distribution; I think that really stood out. This is a terrific opportunity; it’s a burning need for many enterprises.”
  • “The criteria of innovation, market opportunity and the quality of the presentations made it really tough because some may be more innovative than others and some might have a bigger market opportunity,” said Gary Swart, partner at Polaris Partners, an investment firm. “I think Dan’s focus was a differentiator. The fact that there is not only an innovative solution but a focused go-to-market, not trying to boil the ocean and tackle too much.”

The other finalists presenting to the Shark Tank panel were:

  • Emma El-Karout, founder and CEO of One Circle, a digital community of on-demand HR freelancers.
  • Matthew Mottola, co-founder and CEO of Venture L. The company is described as a Shopify for running freelance businesses that enables freelancers to scale their operations.
  • Alexander Torrenegra, CEO of Torre, a professional network that is friendly for both knowledge workers and blue-collar workers that uses programmatic automatic matching for jobs.

The Collaboration in the Gig Economy Conference ends today.

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Despite economic slowdown, Pakistan’s gig economy continues to shine – Business Recorder

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Gig economy saves Australia’s jobs market, but at what cost?

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Don’t be surprised if employers use the recession to employ more casuals and outsource more work.

(Image: Adobe)

There were three messages in the confusing jobs data for August that emerged yesterday from the Australian Bureau of Statistics. The headline number was dramatically better than any economist, or even the Reserve Bank or Treasury, had predicted.

The first is, despite the claims from the media and the Morrison government that the Andrews government’s lockdown was some profound act of economic vandalism, Victoria’s jobless rate only moved up to 7.1% from 6.8%, with 42,000 jobs lost in that state last month. Hours fell by 4.8% in Victoria, compared with a 1.8% rise across the rest of Australia.

Now there may well be another big fall in Victoria in the September data as the numbers catch up. There will be a clue in the ABS’s next payroll jobs and wages data next week.



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