Uber, Lyft, and Independent Contractors

Ridesharing officially came to British Columbia in January, when the provincial Passenger Transportation Board approved operating licenses for Lyft and Uber.  Vancouver is one of the last major cities in North America to get ridesharing, partly because of opposition from the local taxi industry and partly because of the lengthy process to amend the complex provincial legislation regulating rides for hire.

At the moment, ridesharing is limited to the Lower Mainland area (which includes Vancouver), and ridesharing drivers are more strictly regulated than they are in other regions. Uber and Lyft drivers in BC are required to have the same type of driver’s license as a taxi driver, and also have to pay a per-vehicle licensing fee in every municipality they do business in. Those costs will make it difficult for Uber and Lyft to get the types of drivers they do in other cities, who (in Uber’s words) are part-timers “fitting their driving around what matters most” and usually aren’t commercially-licensed drivers.

Several challenges to Uber and Lyft’s operations are already under way. BC taxi companies have filed a lawsuit against Uber and Lyft being granted permission to operate, arguing that the ridesharing firms have an unfair advantage because their licensing requirements are different from taxis. The mayor of Surrey has refused to allow Uber and Lyft to operate in that city. And riders with disabilities are upset that they may not be able to use Uber or Lyft because neither company requires its drivers to have accessible vehicles.

However, one of the most interesting challenges to Uber and Lyft’s arrival actually happened before either company was given permission to start operating. That challenge came from the United Food and Commercial Workers (UFCW) union, which has already unionized Uber Black drivers in Toronto.   In late November, the UCFW filed an application with the BC Labour Relations Board (LRB), contending that the standard ridesharing drivers’ agreements illegally restrict the drivers’ rights to join a union, and asking the LRB to declare the drivers as employees rather than independent contractors.

Classifying workers as independent contractors rather than employees is a not-uncommon employer tactic, if the employer wants to avoid paying for vacation time, overtime, and other benefits that most regular employees must receive.  Independent contractors are also usually not subject to employment standards such as restricted work hours and guaranteed time off.

It’s also not uncommon, even though it’s usually illegal, for employers to declare workers as “independent contractors” if there is a unionization campaign in the workplace. Only workers who are employees can vote to unionize, and if workers suddenly become independent contractors, that means fewer employees to support unionization, and a better chance that the unionizing campaign will be unsuccessful.

For what it’s worth, one of the most high-profile employers using so-called “independent contractors” is WWE professional wrestling – a situation which John Oliver explains here in scathing detail.

But just because an employer decides to call a worker an “independent contractor” doesn’t mean that worker actually is an independent contractor. There’s legal principles that labour relations boards or employment standards regulators will use to determine whether a worker called an “independent contractor” is actually an employee. In Canada, these principles include:

  • Dependency: Does the worker only work for that one employer?
  • Control and direction. Does the employer tell the worker how to do their tasks, or set standards for satisfactory performance of the work?
  • Assignment of work. Does the worker get to choose the tasks that they do?
  • Ongoing relationship with employer. Does the worker continually work for that same employer, even on a non-permanent basis (e.g. a consecutive sequence of temporary contracts)?
  • Similarity of work. Does the worker do similar or identical work to that of workers classified as employees?

If we apply these principles to how Uber and Lyft are operating in BC, we can see that there are several reasons why their drivers might be classified as employees.

  • Dependency: Despite Uber and Lyft presenting themselves as being a part-time option for people wanting extra income, it’s not clear how many drivers in BC are working only for those companies.
  • Control and direction: Both Uber and Lyft have claimed that their drivers are simply using the company’s app to connect with passengers. But both companies also have performance standards that their drivers have to meet, e.g. satisfactory ratings from passengers, safety, timeliness, and cleanliness of the vehicle. (This is similar to the argument that the Canadian Union of Postal Workers is making on behalf of Foodora couriers being classified as employees in Ontario.) Also, both companies can “deactivate” drivers with unsatisfactory records by blocking them from using the app.
  • Assignment of work: Uber and Lyft drivers can choose which rides they want to pick up, but since the requests come through the app, it could be argued that the companies are initially assigning the work and then letting drivers pick their preferred assignment – similar to how employees in other organizations might choose specific working shifts from the choices posted by the employer.
  • Ongoing relationship with employer: Since Uber and Lyft just started operating in BC, it may be too early to make any arguments on either side around this point.
  • Similarity of work: Most of the workers that Uber classifies as employees appear to be in engineering, marketing and administrative positions.

The BC Labour Relations Board is currently providing mediation between the UFCW, Uber, and Lyft. “Mediation” means that a mediator – a neutral third party – meets with both sides to help them arrive at a mutually acceptable solution to the dispute. If the mediator is unable to help the parties reach an agreement, a member of the Labour Relations Board may be assigned to make a decision in the case.

The outcome of this case could set important precedents for other companies in the growing gig economy – for companies already in BC, or for companies considering opening up in BC. We’ll watch and see what happens.

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