Ontario Labour Relations Board Determines Foodora Couriers are Dependent Contractors and can Unionize

In the summer of 2019, the Canadian Union of Postal Workers (the “Union”) filed an application for certification with the Ontario Labour Relations Board (the “Board”) seeking to represent couriers working for the online food delivery company, Foodora, in Toronto and Mississauga.

The Labour Relations Act, 1995, which governs the acquisition of bargaining rights and establishes the collective bargaining regime in Ontario, allows employees and “dependent contractors” to unionize. (Independent contractors do not have access to unionization). While a representation vote was conducted in August 2019, in which Foodora couriers voted on whether they wished to be represented by the Union, it was necessary for the Board to first determine whether the Foodora couriers were dependent contractors before the certification process could proceed. 

The essential question before the Board in determining whether a person who provides services in exchange for compensation is a dependent contractor is whether the relationship more closely resembles that of an employee than that of an independent contractor. In answering this question, the Board will consider the following well-established factors (none of which are determinative):

  • Whether the person can use substitutes (someone else’s labour or skill) to provide the services
  • Ownership of tools or the supply of materials
  • Whether there is evidence of entrepreneurial activity (chance of profit or risk of loss)
  • Whether the person sells services to the market generally (versus a long-standing relationship with one or a limited number of purchasers)
  • Economic mobility or independence (e.g. the freedom to decline work or work where one wishes)
  • Whether the person is able to vary the fees charged to customers for the services rendered
  • The extent to which the person is integrated into the business
  • The degree of specialization, skill, expertise or creativity involved in providing the services
  • Control of the manner and means of performing the work
  • The magnitude of the contract amount, terms and manner of payment
  • Whether the person renders services or works under conditions similar to persons who are clearly employees

The Board found that Foodora couriers are dependent contractors. Foodora couriers cannot use substitutes, cannot increase their chances of profit or risk of loss by virtue of entrepreneurial acumen, often have a long-standing and/or ongoing relationship with Foodora, are generally economically dependent on Foodora, have no real ability to generate their own customers, cannot change the uniform fee schedule charged by Foodora to its customers, and are heavily integrated into Foodora’s business (Foodora’s revenue depends entirely on the reliable and timely delivery service of its couriers). 

The Board found that Foodora exercises control over the couriers in a number of ways. For example, Foodora couriers are able to select shifts based on a ranking system. A courier’s prioritization rate for shift selection is based on a number of factors, such as whether the courier has been regularly working for Foodora and whether the courier has not shown up for prior shifts. In addition, Foodora uses GPS technology to track its couriers and dispatchers will contact a courier if there is an issue with the courier’s location. Dispatchers also report issues with carriers and issue “strikes”, resembling progressive discipline in an employment relationship, in order to enforce Foodora’s standards and expectations. Reported issues and strikes may impact a courier’s prioritization rate for shift selection or even lead to termination. 

In the Board’s view, Foodora couriers “might work independently, but always within the parameters unilaterally established by Foodora and under the watchful eye of dispatch”, such that the relationship between Foodora and its couriers more closely resembles an employment relationship than that of an independent contractor. 

What does this mean for the “Gig Economy”?

The Board noted that this was its first decision with respect to workers in the gig economy but emphasized that the factors it considered were “nothing new”. While the Board’s test with respect to whether a worker more closely resembles an employee than an independent contractor remains unchanged, the Board’s decision highlighted a number of concepts that are likely to apply to other gig economy employers, particularly employers that connect service providers to customers through an App. 

The Board noted that, due to the advancement of technology such as GPS, algorithms, automated alerts, and SMS communications, Foodora is able to control its operations with minimal human interaction. However, this lack of human interaction did not persuade the Board that Foodora is not closely monitoring or controlling its couriers. To the contrary, Foodora’s sophisticated technology better allows it to monitor and control its couriers to ensure that service standards are met. 

The Board also considered the fact that the App is personalized to the registered user, which means that couriers cannot use substitutes (other workers) to perform the services. 

The significance of the App was also demonstrated in the Board’s analysis with respect to the tools used to provide the services. While the couriers provided most of the tools required to perform the work (transportation, a smart phone, etc.), the Board emphasized that Foodora provided the App (and the software and algorithms that support the App), which is the most significant tool and the “lynchpin” of the food delivery process. 

In addition to the use of advanced technology and the concept of running operations through an App, a common aspect of the gig economy is that the workforce is temporary and flexible. In this case, the Board considered evidence that Foodora couriers often work for a number of delivery services, may work for multiple services simultaneously (also known as “dual Apping”), and may not make all or even a majority of their earnings by providing services through Foodora. However, the Board found that the nature of the employment relationship was akin to working multiple part-time or casual jobs and was not a new concept.

It remains to be seen whether the Union’s application for certification will be successful in this particular case. However, the Board’s decision is likely to lead to union organizing with respect to Foodora couriers in other parts of Ontario as well as service providers working for other gig economy employers. 

Update

On April 27, 2020 Foodora announced that it would be ceasing operations in Canada, effective May 11, 2020.