The Supreme Court of Canada heard arguments in Uber Technologies Inc. v. Heller, a case which could have widespread consequences for mandatory arbitration clauses in employment contracts.
The representative plaintiff, Mr. Heller, seeks certification to bring a class action against Uber. Mr. Heller alleges that he and other Uber drivers are employees, and are therefore entitled to the benefits of Ontario’s Employment Standards Act.
However, Uber drivers are required to sign contracts that include mandatory arbitration clauses. Under the arbitration clauses, all disputes that cannot be resolved through mediation must go to an arbitrator in Amsterdam (although the drivers are located in Ontario). Uber applied for Mr. Heller’s court action to be stayed in favour of arbitration in the Netherlands.
Uber’s application was initially successful, with the motion’s judge granting a stay in favour of arbitration. In Heller v. Uber Technologies Inc., 2019 ONCA 1, however, the Ontario Court of Appeal reversed, concluding that Uber’s arbitration clause could be unenforceable on two grounds:
- If the Uber drivers are employees (which is disputed), then the arbitration clause is an unlawful attempt to contract out of section 5(1) of Ontario’s Employment Standards Act. The relevant provision states that “no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void.”
- The arbitration clause is unconscionable, as it is a “substantially improvident or unfair bargain.”
If the Supreme Court of Canada upholds the decision of the Court of Appeal – and particularly the finding that the arbitration clause could breach the Employment Standards Act – then this decision could invalidate a large number of arbitration clauses found in existing employment contracts. Whereas a finding of unconscionability may apply only to the unique facts of this case, a larger number of arbitration clauses could similarly be struck out as attempts to contract out of provinces’ various employment standards acts.
A webcast of the hearing can be viewed here.