The workplace is no longer limited to the traditional computer and desk we were so used to. What the workplace looks like has evolved over the years, particularly as the “gig economy” becomes more relevant. Chances are you have heard of and used Uber, UberEats, Lyft, Foodora, SkipTheDishes, and the list goes on. These Apps allow their users to conveniently access transportation or delivery services by connecting users with approved workers that are closest to them in proximity to ensure time-efficient service. Workers for the company are often promised the ability to choose their preferred shifts, take a break whenever they like, and decide to work more or less. This all sounds enticing, doesn’t it? With these app-based companies’ growing impact, it is important to take a look at their worker’s “status.” There are three specific categories that workers can fall under: (1) employees, (2) independent contractors, and (3) dependent contractors. Does this type of work make you an independent contractor, dependent contractor, or an employee? More importantly, why does this matter?
Who is an Independent Contractor?
At one end of the spectrum are independent contractors. Independent contractors enjoy a great deal of freedom with the work they do. They can choose to work their own hours, determine remuneration, choose the projects they want to do, determine how they want to work and such. However, this comes with a cost: a lack of employment benefits, rights and protections available under various employment law statutes.
Who is an Employee?
At the other end of the spectrum are employees. Although employees are not offered such freedom and flexibility, they are protected by various employment law statutes. For example, Ontario’s Employment Standards Act applies to Ontario employees but not necessarily to independent contractors. Independent contractors do not have the right to unionize like employees do. Employees are eligible for employment insurance and Canada Pension plans while independent contractors may be able to opt into their own employment insurance or other benefit plans if they wish to obtain such benefits. Employees can commence an action for wrongful dismissal, unlike an independent contractor.
Who is a Dependent Contractor?
Between the two ends of the worker spectrum is a “newer” category – dependent contractors – a term coined to fill in the void for workers who work in new workplaces that do not follow the traditional work model. They lean slightly more towards being similar to an employee than to an independent contractor. Herein, they enjoy some benefits and rights.
How Can I Know if I am an Employee, Independent Contractor, or Dependent Contractor?
Through case law, the courts have articulated that there is no exact, clear-cut test to determine whether someone is an employee, independent contractor, or dependent contractor. The “test” is an examination of the true nature of employment, conducted on an unique factual matrix revealing the control and dependency in the working relationship. This concept is perhaps more easily understood through the “duck test” – if it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck.
The courts evaluate the degree of control the worker has over his or her work and the extent to which the worker is subject and subordinate to another’s decisions over working conditions and remuneration to make the determination. Breaking the factors further down would entail an analysis of: the level of control over the worker’s activities, whether the worker provides their own equipment for work, whether worker hires his or her own helpers, financial risks taken by the worker, degree of responsibility over investments in the company, degree of management by the worker, the worker’s opportunity for profit and risk, and the exclusivity of the worker. None of these factors standalone are determinative, and all may be taken into account when attributing a worker to a category.
The Foodora Case: Food Delivery Persons are Dependent Contractors
While it may seem that gig workers, given their “freedom,” falls within the independent contractor category at a glimpse, a recent Ontario Labour Relations Board (“OLRB”) decision (CUPW v Foodora) determined that the Foodora food delivery persons/couriers are actually dependent contractors. The issue in CUPW v Foodora was whether food delivery persons/couriers fell into the category of independent contractors or employees. The OLRB’s designation is significant and means that food delivery persons/couriers are entitled to all the rights and benefits available to employees including being allowed to unionize under the Ontario Labour Relations Act.
Although the factors used to determine the relationship may vary case by case, in the Foodora case, the OLRB focused its analysis on the tools used for work, a chance of profit and the level of control. The finding that the software application (“App”), rather than the vehicle, used for work was the key tool to work became a major “plot twist,” as it undermined the argument that the gig workers provided their own tools and thus could not be considered employees.
The OLRB further found that the App was central to work and was owned, maintained and controlled by the Company. While gig workers are not prohibited from working for multiple companies, even competitors, this was not considered a real chance of profit. In its analysis, the OLRB drew the critical distinction between working “harder” by signing up for more shifts and a real chance at profit from work within the company. Simply taking on more shifts or working for others is not a chance of profit that originates from their positions within the company, such as through investments. Lastly, the level of control was certainly limited for food delivery persons/couriers. While food delivery persons/couriers can sign up for their desired shifts, working times (shifts) were ultimately released and controlled by the company, work opportunities or deliveries during a particular shift were regulated by the company’s algorithm, remuneration was determined by the company, and so on.
Balancing between the factors, the OLRB ultimately found that Foodora’s couriers (workers) were dependent contractors entitled to certain protections and rights, including the right to unionize.
How is this relevant to me?
Much of the analysis is applicable to workers in similar “workplaces,” such as Uber and Lyft. This OLRB’s decision opens the doors for similar gig workers to argue that they may actually fall under the umbrella of an employee and not an independent contractor, which translates to entitlement to additional rights and protections under statutory law. With the ongoing growth of app-based companies and workplaces, this decision makes a clear statement that companies cannot and should not impose conditions of work that contravene Ontario or Canadian workplace regulations.
While employers may prefer working with contractors due to the cost incentives, cloaking the worker’s relationship as an independent contractor, denying him or her from protections and rights may ultimately backfire. The courts are clear: it does not matter how you designate a worker’s position, the very essence of the working relationship will determine if a worker is an employee or not.
Takeaway for Employers
Employers – just because the contract states that a worker is an independent contractor does not mean it cannot be contested. The designation only gets you so far. An analysis of the tasks and characteristics of the work eventually reveals the truth.
Takeaway for Employees
Likewise, employees – just because your employer says you are an independent contractor does not mean you will be locked down as an independent contractor no matter what work you do. You may be entitled to rights and protections of an employee if you fall within the characteristics of an employee. As the courts have indicated, at the very core, it is about the nature of the work relationship itself and not about the title.
|Employees||Dependent contractors||Independent contractors|
|Employment Standards Act||Yes||No||No|
|Canada Labour Code||Yes||Yes||No|
|Employment Insurance and Canada Pension plans||Yes||No, with exceptions||No, with exceptions|
|Income tax||“normal” tax rules||No (can deduct expenses, etc.)||No|
|Priority in bankruptcy||Yes (unpaid wages up to $2000)||No||No|
 McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39 at para 27.
 Ibid at para 28.
 Braiden v La-Z-Boy Canada Limited, 2008 ONCA 464.
 Peepeekisis Cree Nation No 81 v Dieter, 2018 FC 411.