Supreme Court sides with Uber drivers, opening door to $400M class-action lawsuit
Ride-hailing service argued arbitration — not the courts — is the right way to solve disputes with drivers
Canada's highest court opened the door to a proposed $400-million class-action lawsuit against Uber today after it sided with a driver in a case over whether workers can settle disputes with the ride-hailing company through a costly, foreign arbitration process or through Ontario courts.
In an eight-to-one decision, the Supreme Court of Canada ruled that drivers can have labour issues resolved through Ontario courts, opening up the possibility of Uber drivers being seen as employees within the meaning of Ontario's Employment Standards Act.
Uber had challenged an Ontario Court of Appeal decision that found the company's contract clause, which relies on a costly arbitration process in the Netherlands to settle disputes, was "unconscionable" and "unenforceable."
In an email statement, a spokesperson for Uber said the company will amend its contracts to align with the court's principles.
"Going forward, dispute resolution will be more accessible to drivers, bringing Uber Canada closer in line with other jurisdictions," the statement said.
"We are proud to offer a flexible earning opportunity to tens of thousands of independent drivers throughout Ontario."
The lower court ruling came after David Heller, a driver for UberEATS, attempted to launch a class-action lawsuit in 2017 to force the company to recognize its drivers as employees rather than independent contractors.
Heller, who no longer works for Uber, started legal action after he received a message on his cellphone asking him to accept changes to the way he is compensated.
"There was clearly inequality of bargaining power between Uber and Mr. Heller," the Supreme Court's ruling said.
"The arbitration agreement was part of a standard form contract. Mr. Heller was powerless to negotiate any of its terms."
His lawyer, Lior Samfiru, said Heller agreed to the changes because he was out on a delivery in Toronto at the time — and wouldn't have been paid if he had declined.
"If the court agrees with Uber, then every company can have its workers sign a document that says the same thing," Samfiru said before the Supreme Court issued its decision.
"That would mean that companies can do whatever they want with impunity."
Are individuals in the gig economy employees?
Uber had won a stay of the proposed class action before Ontario Superior Court because of a clause in the contract that requires all disputes between drivers and the company to go through a mediation process in the Netherlands — at a personal cost of $14,500 US for drivers.
"Practically no one will do that," Samfiru said.
Heller, who had been licensed to use the Uber Driver App since February 2016 in Toronto, earned between $20,800 and $31,200 per year before taxes and expenses.
In November 2018, Ontario's highest court ruled Uber's clause amounts to illegally outsourcing an employment standard.
Uber maintained that arbitration, not the courts, is the right forum for deciding the validity of an arbitration agreement.
The proposed class-action lawsuit, which has not yet been certified, aims to provide a minimum wage, vacation pay and other protections under Ontario's Employment Standards Act to anyone who works for Uber or has worked for the company in Ontario since 2012.
Samfiru said the high court's decision has wide implications for the gig economy, and starts the discussion about whether people in the free market are employees.
"We cannot have a system where companies can do whatever they want, whenever they want, without any repercussions," Samfiru said.
"The only way that we can even balance that inequality somehow is by giving individuals access to tribunals, like the labour relations board, or to our courts across the country."
With files from The Canadian Press