In a recent decision that has been the subject of considerable commentary in the United States, the California Labor Commissioner held that an Uber driver was an employee rather than an independent contractor. While this decision is not a binding legal precedent in Ontario, “crowdsourced” businesses which provide technological platforms or apps connecting users seeking services with service providers should take note that they are not necessarily immune from similar findings.

Uber made several strong arguments in support of its position that it did not employee drivers. Uber argued that it merely connected passengers with private drivers by providing the two parties with a technological platform, the Uber App. The drivers were independent vehicle owners who provided transportation services. Uber emphasized that it did not exert any control over hours of work nor did it require a minimum number of rides. In addition, Uber drivers were not geographically restricted nor reimbursed for expenses related to operating their personal vehicles.

The California Labor Commissioner ruled that, in the case at hand, the Uber driver was an employee. Uber was not simply a neutral technological platform; rather, Uber was involved in “every aspect of the operation”, as evidenced by the following:

  • Uber vetted its drivers;
  • Uber required its drivers to register their cars;
  • Uber required cars to meet specific standards;
  • Uber monitored the ratings of its drivers and disabled Apps for drivers who fell below a specific rating from using the Uber App;
  • Passengers paid Uber a set price for the trip and Uber paid the drivers;
  • Drivers could not negotiate fees with the passenger and were discouraged from accepting tips; and
  • In the case at hand, the driver’s work did not entail any managerial skills that could result in profit or loss and she had no investment in the business.

Many were surprised by the outcome of this case given the minimal level of control that Uber exercised over drivers. Surprise aside, the Uber case is a good reminder that in determining whether an employment relationship exists, it is the total relationship between the parties that is determinative of whether an individual is an employee or contractor.