The “Gig Economy” And The Perils Of Being An “Independent Contractor”
With the rise of the new gig economy, and companies that use a digital platform to link people to services, a growing class of “independent contractors” is emerging in Ontario’s labour market.
These positions boast of self-employed like advantages, chose your own hours, refuse jobs as you like, however the greater advantage is had by the platform. By identifying their workforce as “independent contractors” companies can avoid the legislative protections afforded by the Employment Standards Act. Calling someone an independent contractor is a way some companies try to get around all of those obligations.
These obligations include deducting income tax, CPP and Employment Insurance premiums, providing statutory holidays, overtime and termination pay protections, maternity and disability leave, and the ability to access workers compensation. Employers are also required to maintain minimum health and safety standards and policies in the workplace, which protections don’t exist in the gig economy. That’s because “independent contractors” don’t qualify for those protections since technically, they aren’t employees.
While the government has been slow to heed the calls to expand employment protections to those working in the new gig economy, a recent class action started in Toronto against Uber is alleging that Uber has misclassified its workforce as independent contractors, depriving their drivers of employment standards protections such as overtime pay. The claim alleges that the company trains its workers, sets pay rates, and controls work volume. The case follows on the heels of similar suits launched in various states in America, including California, which have been met with some success.
The issue of whether someone is an independent contractor or an employee arises often in the context of liability issues, or employment protections. In Ontario this is often an issue before the WSIB when an “independent contractor” has been injured or involved in causing an injury. The classification can have an impact on whether the company they work for bears any responsibility for the injuries caused, and how the classification affects the injured party’s right to sue.
Tribunals and courts in making the determination about whether an independent contractor should be deemed as an employee, will usually consider the true nature of the relationship. They will look at things such as:
- how much control the company has over hours
- whether the pay is negotiable or fixed by the company
- who pays for expenses incurred by the worker to do the job
- who owns the equipment to be used
- whether the worker “invoice” the company and charges sales tax
- whether the worker offers their services to other companies or are restricted to working for the one company
This is not an exhaustive list but gives an idea of what is important in deciding who is an employee. These considerations and the issues surrounding the growing classification of “independent contractors” in the new gig economy highlight the precarious nature of this type of employment. Although platforms such as Uber often boast of their contributions to the economy by providing economic opportunities, their participation in the labour market leaves most people who seek out these jobs without minimum employment protections. Many people who participate in the gig economy do so because they are underemployed and these participants already represent a vulnerable class.
In response to the changing nature of the way people are working, the Ontario government has initiated a Changing Workplaces Review to address how employment standards legislation should be changed to reflect these new realities and provide better protection for workers in the new “gig economy”.