Uber drivers who want to fight their employer in court will have to go to the Netherlands to do it, an Ontario judge has ruled — exposing what employment lawyer Lior Samfiru calls a dangerous loophole in the province’s labour laws.

The decision follows a class-action lawsuit launched by Toronto-based Samfiru Tumarkin LLP arguing Uber drivers are employees entitled to protection under the Employment Standards Act — not independent contractors as the company claims.

Uber fought the class action, arguing that its service agreements with individual drivers specify that disputes must be resolved through arbitration in the Netherlands, where one of the company’s arms is incorporated.

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The Ontario superior court agreed, quashing the class action for now. The firm representing drivers has served its notice to appeal the decision, which Samfiru says sets a dangerous precedent for Ontario workers’ rights.

“It robs any driver from having a remedy here,” Samfiru said. “Aside from the obvious logistical issues, the cost is prohibitive.”

“You can take our employment laws and essentially throw them in the garbage. Rights are of no value if they cannot be enforced.”

Uber spokesperson Xavier Van Chau said the superior court decision pointed to the dispute resolution mechanisms the company already provides, such as drivers’ “In-App Support” where customer service representatives respond to “queries and complaints” over small sums of money.

“Uber’s legal team is located primarily in the Netherlands with local assistance in certain jurisdictions in which Uber operates. When drivers’ complaints or disputes with Uber cannot be resolved through either level of assistance with In-App Support or at a Greenlight Hub, the matter may be referred to Uber’s legal team,” the decision said.

Samfiru says the Ministry of Labour should intervene by changing its employment laws to prevent disputes being arbitrated overseas. Currently, the Employment Standards Act is silent on the matter, which Samfiru argues could open the door to other corporations adding arbitration clauses to workers’ contracts to evade local legal obligations.

“This is not an Uber specific situation. There’s nothing unique to the Uber arrangement,” he said.

Ministry of Labour spokesperson Janet Deline said Minister Kevin Flynn was aware of the superior court decision.

“The Government of Ontario is currently reviewing the case and considering whether to seek leave to intervene in this matter,” she said.”

The original class action filed last year sought $200 million in damages on behalf of around 20,000 Uber drivers in Ontario and claimed they were Uber employees entitled to rights like the minimum wage and overtime pay.

Uber argues its drivers are independent contractors, a category of worker that is not covered by employment legislation.

Under Ontario law, a worker is generally considered an employee if the business directs the nature of their work, including deadlines and pay rates. Other indicators include providing a worker with tools and equipment to do their job or the ability to suspend, dismiss, or discipline a worker. The Ministry of Labour can find a worker is an employee even if their employer calls them an independent contractor.

Recent reforms introduced through new employment legislation, Bill 148, mean it is now explicitly prohibited to misclassify an employee as an independent contractor. When disputes arise, the onus is on the employer to prove the worker is not an employee.

“Courts in the United States, Australia and France have all recognized that rideshare drivers are self-employed,” said Van Chau. “Drivers can set their own schedule hour-by-hour, day-by-day, and week-by-week. In Canada, approximately half of all drivers drive less than 10 hours a week. This means that these partners can tend to child care, invest in their education or work another job, driving only when they need or want — even if that’s just to pay an unexpected bill or the rent between jobs.”

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South of the border, Uber has been the subject of numerous class action suits arguing its drivers are employees. Uber initially agreed to a $100 million settlement to one of the first such suits launched in California, after a district judge called their arbitration agreements unconscionable. But an appeals court subsequently upheld Uber’s arbitration clause.

Samfiru says he is not aware of any jurisdiction with legislation that forbids arbitration clauses when it comes to employment rights, although there is a similar provision in Ontario’s consumer protection laws.

Given new protections for vulnerable workers introduced by the provincial government in November, Samfiru says it’s now more urgent than ever to ensure they can’t be sidestepped.

“If the ESA can now be circumvented that way, these changes are meaningless,” he said.

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