Paving the way for union certification, in Canadian Union of Postal Workers, v Foodora Inc. d.b.a. Foodora the Ontario Labour Relations Board (OLRB) has determined that Foodora couriers are dependent contractors, as defined in Ontario’s Labour Relations Act. The OLRB’s decision provides some clarity in defining the status of workers in the modern gig economy who do not fall clearly into the classical categories of ’employees’ and ‘contractors’.
Background
Foodora, which provides a service delivering food from restaurants to customers, hires couriers to perform its deliveries. At the time of hire, Foodora’s couriers are required to sign contracts stating that they are hired as independent contractors.
Foodora couriers are not required to go through a typical hiring process with interviews. Rather, they are required to confirm that they are over the age of 19 and eligible to work in Canada, indicate their language and preference and vehicle type, and in some cases complete a short screening process over the phone or text message.
The OLRB reviewed the nature of the couriers’ working relationship with Foodora, including the following relevant factors:
- Ownership of tools: Foodora couriers are required to provide most of their tools, including a car or bicycle, a cell phone, an insulated food delivery bag (which may display the branding of a competing food delivery service), and safety equipment. Foodora, on the other hand, provides couriers with the app needed in order to perform the work.
- Job orientation: Couriers are given a 30 minute orientation session on the Foodora app and a rider guide reviewing the delivery policy and the app functionality.
- Shift schedules: Foodora releases a schedule of available shifts each week, and couriers can select available shifts. Additional shifts may be added depending on demand, but couriers cannot simply start working without prior approval from Foodora. While couriers are permitted to drop a shift with 24 hours’ notice, it becomes more difficult to drop a shift with less notice.
- Assignment of food deliveries: Food deliveries are assigned to available couriers based on an algorithm that factors in the location of the courier, restaurant, and customer.
- Discipline: Couriers may have their engagements suspended or terminated for various grounds (referred to as ‘deactivation’, which can be temporary or permanent). Issues that can result in a deactivation, or a lesser warning, include complaints, failure to work scheduled shifts on time or at all, and failing to sign up for any shifts over an extended period of time. Couriers may also lose their priority to access preferred shifts as a response to misconduct or performance issues.
- Compensation: Couriers are typically paid $4.50/order, $1/km between pickup and drop off, and any tips. Foodora occasionally offers other incentives to encourage couriers to work during peak periods. In some areas with lower customer demand, couriers are guaranteed compensation of at least $16/hour as long as they meet certain performance metrics.
- Deductions: Foodora does not make deductions for taxes, Employment Insurance, or the Canada Pension Plan.
- Ability to work elsewhere: Couriers are permitted to work with other employers, including with Foodora’s competitors.
Issue
Are Foodora couriers ‘dependent contractors’ as defined in the Ontario Labour Relations Act? Section 1(1) of the Act specifically defines a ‘dependent contractor’ as follows:
“dependent contractor” means a person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor
Decision
The OLRB held that the key question is whether Foodora and its couriers “more closely resemble the relationship of an employee or that of an independent contractor.” Relying on previous OLRB jurisprudence, the board determined that the following factors supported a finding of a dependent contractor relationship because of the employment-like characteristics:
- Whether a worker can use substitutes: If a worker is allowed to hire a substitute to perform their work, this is inconsistent with an employee-like relationship. Foodora couriers, however, are not permitted to use substitutes to perform their work when they are unable to do so.
- Ownership of tools: Whereas the couriers provide most of the physical tools, Foodora provided the app necessary in order to work. The OLRB held that the app, exclusively owned and developed by Foodora, is an important tool, as it is “the lynchpin in the process to deliver food.”
- Evidence of entrepreneurial activity: In assessing a courier’s opportunity to earn a profit or suffer a loss based on their entrepreneurial acumen, the OLRB noted that couriers can earn more by working more. But aside from increasing their compensation through their contribution of labour and skill, couriers have little opportunity to control their profit, and little (if any) risk of loss.
- Selling one’s services to the market generally: Couriers are permitted to work elsewhere, but are expected to give priority to Foodora during their scheduled shifts. Unlike a typical independent contractor relationship where a worker provides their services to customers on an ad hoc basis, couriers are not able to sell their services directly to a customer or a restaurant.
- Economic mobility: Couriers are free to pursue other work (and typically do). But the OLRB noted Foodora employs a system of incentives and restrictions that limit a courier’s choices, in a manner akin to an on-call employee.
- Evidence of variation in fees charged: Unlike a typical independent contractor who may set their own rate, couriers only receive the standard wage set by Foodora.
- Integration into the company: The OLRB noted that couriers are heavily integrated into Foodora’s business. The Foodora business relies primarily on its couriers to deliver their services, and the couriers rely on Foodora to facilitate the relationship between the restaurants and the customers.
- Control of the manner and means of performing the work: Foodora closely controlled both the manner and means of performing the courier services.
Taking these factors into consideration, the OLRB determined that the Foodora couriers meet the definition of dependent contractors:
[171]…The couriers are selected by Foodora and required to deliver food on the terms and conditions determined by Foodora in accordance with Foodora’s standards. In a very real sense, the couriers work for Foodora, and not themselves.
[172] This is the Board’s first decision with respect to workers in what has been described by the parties and the media as “the gig economy”. However, the services performed by Foodora couriers are nothing new to the Board and in many ways are similar to the circumstances of the Board’s older cases. This is not the Board’s first case examining the relationship of couriers. The Board has been tasked with the same questions about dependent contractors in various sectors including transportation and construction. Such cases have always been fact-based inquiries that require a balancing of factors. This case is no different in many respects.
[173] For the foregoing reasons, the Board finds that Foodora couriers are dependent contractors and must be treated as such under the Act. As the evidence bears out, couriers more closely resemble employees than independent contractors.
The OLRB’s determination is made in the context of the specific definition of ‘dependent contractor’ that is set out in the Labour Relations Act. It may not be, therefore, directly applicable to decisions made in other contexts. But the analysis is similar to that used in other forums when characterizing a working relationship, and may provide a useful guide in determining whether a ‘gig economy’ worker is an employee, independent contractor, or something in between.