Canada: Don’t Depend on Arbitration Rules in Misclassification Suits

A recent ruling by the Supreme Court of Canada validated a contractor’s complaint about the rate of pay for his freelancer relationship with Uber. The original suit by an Uber Eats driver sought a minimum wage plus benefits associated with employees, such as vacation pay. The company contested the complaint on the grounds that the driver had accepted a standard services agreement, which requires disputes to go through arbitration, making the suit in court invalid.

The court said the agreement, which would require the driver to travel to the Netherlands for arbitration, is unfair and effectively blocks the worker from having any recourse. The finding opens the door to the driver’s class-action lawsuit, which will seek to gain worker protections under Ontario's Employment Standards Act.

Takeaway: The case reveals two areas of action for companies engaging non-employee talent. First, monitor the case carefully, as the outcome may change how companies manage and pay gig workers in Canada. Second, organizations may want to review all existing service agreements to ensure the terms are reasonable for all sides. Aside from the compliance risks, the reputational damage of a poor service agreement may impact an organization’s ability to secure talent in the future.

Canada: Don’t Depend on Arbitration Rules in Misclassification Suits

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