Last week the Ontario Labour Relations Board (“OLRB” or the “Board”) rendered a historic decision for the Canadian gig economy by finding that Foodora’s food-delivery couriers in Toronto and Mississauga are dependent contractors that are entitled to unionize under the Ontario Labour Relations Act, 1995 (“LRA”).
The gig economy generally involves temporary and flexible work arrangements where workers are considered to be independent contractors, which is often facilitated by software applications (“Apps”) that connect workers with discrete work assignments, or “gigs”. While gig work has been around for years now, unions and individuals have only recently began to challenge whether gig workers are truly independent contractors, as companies like Uber, Foodora, and Lyft claim, or whether they are actually employees or dependent contractors (an intermediate category of worker, characterized by economic dependency).
The answer to this question has massive implications for the gig economy because employees in Ontario are entitled to a broad range of employment standards protections under the Employment Standards Act, 2000 (“ESA”). Employees and dependent contactors in Ontario are also entitled to unionize and engage in collective bargaining under the LRA, and are entitled to reasonable notice of termination or pay in lieu thereof under the common law. Notably, independent contractors are not entitled to any of these protections.
In Canadian Union of Postal Workers v Foodora Inc. [Foodora], the OLRB ruled that Foodora’s food delivery couriers are dependent contractors because the nature of their work more closely resembles that of an employee than an independent contractor, and that the couriers are therefore entitled to unionize and bargain collectively under the LRA.
Canadian Union of Postal Workers v Foodora Inc.
In 2019, the Canadian Union of Postal Workers (“CUPW” or the “Union”) applied to the OLRB for certification as the exclusive bargaining agent for a group of Foodora couriers in Toronto and Mississauga, who voted in August 2019 on whether they wanted to join the Union. Foodora challenged the Union’s application by arguing that its couriers are independent contractors that are not eligible to unionize, which led the Board to order the ballot box to remain sealed until it determined whether the couriers were eligible to unionize. The Board was therefore required to determine whether the Foodora couriers are dependent contractors, or independent contractors.
Under s. 1 of the LRA, an “‘employee’ includes a dependent contractor”, such that dependent contractors are entitled to unionize under the LRA. Under the LRA, a “dependent contractor” is defined as,
“a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor”.
Accordingly, the OLRB had to determine whether the Foodora couriers more closely resembled employees or independent contractors by considering a number of relevant factors that have been identified over the years in the Board’s jurisprudence.
These factors include:
- the use of, or right to use substitute workers;
- ownership of instrumentalities, tools, equipment appliances, or the supply of materials;
- evidence of entrepreneurial activity;
- the selling of one’s services to the market generally;
- economic mobility or independence, including the freedom to reject job opportunities, or work when and where one wishes;
- evidence of some variation in the fees charged for the services rendered;
- the extent, if any, of integration;
- the degree of specialization, skill, expertise or creativity involved;
- control of the manner and means of performing the work;
- the magnitude of the contract amount, terms and manner of payment; and
- whether the individual renders services or works under conditions which are similar to persons who are clearly employees.
In reaching the conclusion that the Foodora couriers are dependent contractors, the OLRB found that the following factors, among others, suggested that the couriers more closely resemble employees than independent contractors:
- Foodora prohibits couriers from using substitute workers to perform their work;
- Foodora owns and controls the App, which is the single most important tool for the delivery process;
- the couriers are “a mere cog in the wheel that is powered by Foodora” and there was minimal evidence of the couriers engaging in true entrepreneurial activity;
- the couriers are not able to sell their courier services directly to customers or restaurants, because they can only connect with the customers and restaurants through the App;
- Foodora exercises substantial control over the scheduling of shifts, couriers must regularly work shifts to remain registered with Foodora, and couriers are expected to accept all orders that are assigned to them;
- the couriers cannot vary the rates or fees set by Foodora;
- the couriers are “heavily, if not entirely, integrated, into Foodora’s business”; and
- Foodora exercises substantial control over the manner in which couriers perform work, including by monitoring, supervising, and disciplining couriers.
Based on the relevant factors, the OLRB concluded that “[t]he couriers are selected by Foodora and required to deliver food on the terms and conditions determine by Foodora in accordance with Foodora’s standards. In a very real sense, the couriers work for Foodora, and not themselves”. Accordingly, the OLRB held that the Foodora couriers are dependent contractors that are entitled to unionize under the LRA.
Nonetheless, the OLRB has yet to grant union certification to the Foodora couriers or unseal the ballot box from the certification vote because other issues regarding voter eligibility are still outstanding.
Foodora is a historic decision because it is the first time that gig economy workers have been recognized by a Canadian court or tribunal as dependent contractors that are entitled to unionize. Accordingly, Foodora will likely serve as an important precedent for other Canadian gig workers arguing that they are dependent contractors and not independent contractors.
It is important to note, however, that dependent contractor status under the LRA is similar to but distinct from dependent contractor status under the common law, because the common law test for dependent contractor status is somewhat different than the OLRB’s test in relation to the statutory definition under the LRA (read our recent blog for more information on how dependent contractor status is determined under the common law). As discussed above, workers that qualify as dependent contractors under the common law are entitled to reasonable notice of termination, or pay in lieu thereof, whereas independent contractors are not. Therefore, while the Foodora decision does not necessarily mean that these couriers are dependent contractors under the common law that are entitled to reasonable notice or pay in lieu of notice, the decision may make it more likely for a court to recognize such workers as dependent contractors under the common law.
Foodora also serves as a good reminder to non-unionized employers about the importance of worker classification and its implications for their legal obligations and exposures, particularly when it comes to ending working relationships. Accordingly, all employers would be well advised to take this opportunity examine and evaluate the accuracy of how they classify their workers and should consider seeking legal advice if they make extensive use of “independent contractors” that may actually be employees or dependent contractors at law.
This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.