Freed of the drudgery of clocking into work at a boring office, these young knowledge workers have the ability to choose their own career paths, working when they wish, where they wish, for whom they wish. What could be better than being your own boss? Forget being an employee. Become an independent contractor.

'Who could be against the gig economy? The image of millennials, sporting toques and earbuds as they earn their living tapping away on their laptops in a third-wave coffee shop is ubiquitous. It’s way of the future, we’re told.

Jason Droege (right), Head of Uber Everything at Uber Technologies talks to one of their partners Patrick who has a 100% rating after over 4,000 deliveries on June 22, 2018. Randy Risling/Toronto Star

Who could be against the gig economy? The image of millennials, sporting toques and earbuds as they earn their living tapping away on their laptops in a third-wave coffee shop is ubiquitous. It’s way of the future, we’re told.

Freed of the drudgery of clocking into work at a boring office, these young knowledge workers have the ability to choose their own career paths, working when they wish, where they wish, for whom they wish. What could be better than being your own boss? Forget being an employee. Become an independent contractor.

The reality, unfortunately, is different. Employers are increasingly using the excuse of the gig economy to slash labour costs by morphing all kinds of employees into independent contractors. We’re not just talking about Uber drivers who supply their own vehicles or drywall installers who provide their own tools and set their own work schedules – we’re talking about workers who look like employees and act like employees but have been miraculously turned into independent contractors.

The advantages to employers are huge. Once a worker has been designated an independent contractor, the employer no longer has to pay Canada Pension Plan (CPP) premiums or make employment insurance contributions. No need to deduct income tax at source or worry about vacation pay, overtime etc. This can slash up to 20 per cent from labour costs, according to some estimates.

Law firms and human resource firms are glad to help. As Faskens notes in an article on its website, “Enterpreneurs, for example, can benefit from the multitude of professional services to their business without the onerous employment obligations.”

According to Burnet, Duckworth & Palmer LLP, a Calgary law firm, “considerable savings may be gained by recruiting workers as independent contractors. Not only does this eliminate ongoing costs of perks and benefits, in many instances it also allows the employer to terminate contractual relationships with significantly lesser notice obligations.”

And, of course, says the law firm, it’s just fabulous for workers. “Interestingly, more and more workers are willing takers of such arrangements because they can be their own boss,” the law firm notes.

Somehow, the teachers at Blythe Academy, a private school in Toronto, didn’t feel so thrilled about the idea of being considered independent contractors, with no access to protections under Ontario’s Employment Standards Act, including the right to a minimum wage, overtime, vacation and statutory holidays.

So they launched a class action suit. In November, Blythe Academy agreed to a settlement, which will pay out $2.5 million to between 1,000 and 2,000 teachers who worked at the school between September 2015 and September 2019. The settlement was expected to get court approval this week.

According to Stephen Moreau, a lawyer at Cavaluzzo, who represented the aggrieved teachers, a minority of Blythe’s teachers were considered full-time employees and were treated as such, subject to provincial labour standards. Blythe also paid the employer share of CPP and employment insurance (EI) premiums.

But the majority of teachers, who worked less than full time, could only work as independent contractors, with considerably fewer protections. Karen Walmsley, who taught up to three courses a day, said that in the fall of 2015, she was paid $7,000 for 10 weeks of teaching and worked 80 hours a week, including class preparation and other out-of-class tasks, which meant she earned less than minimum wage.

Blythe didn’t admit any wrongdoing in the settlement. Moreau, the teachers’ lawyer, says he’s “very satisfied” with the ruling.

In another recent case, the Federal Tax Court has ordered a Toronto catering company, AE Hospitality Ltd., to pay Canada Revenue Agency $496,000 in EI and CPP premiums that the company should have been paying on behalf of its waiters and chefs for years. The catering firm had gotten its workers to sign agreements that they were independent contractors but the court ruled that were, in fact, employees.

Cary Silber, the owner of the catering company, is appealing the ruling.

He doesn’t see anything wrong with what his firm was doing because the waiters were just earning some cash to supplement their income. “These were artists, entertainers, actors,” he told The Globe and Mail.

Why in the world would an artist need a holiday or overtime? Or EI for that matter? Work for them is just a lark, it would seem, just a bit of a side hustle in the gig economy.

The judge didn’t see it that way. AE Hospitality exercised control over its workers and supervisors told waiters how to present the food and set tables, she ruled.

If it acts like a duck, it must be a duck, even if a stingy employer wants to designate all its workers as “independent contractors.”

What’s worse in this case is that AE Hospitality was providing its workers to two associated catering companies, one partially owned by Silber’s son and the other owned by his wife. So this was clearly a corporate organization designed with the goal of hiring workers at the lowest possible cost.

The problem is that in all jurisdictions except Quebec, there’s no statutory definition of what an employee is. It’s determined by court rulings. But thankfully, the Canada Revenue Agency is watching.

Over the years, Canada has developed a series of protections for employees, to avoid exploitation, to assure they get paid for vacations and statutory holidays. We’ve determined that employers have responsibilities to protect employees in case of workplace accidents and unemployment, through contributions to state-run plans. They now have a responsibility to share in the costs of workers’ retirement, through CPP.

Yes, they are a cost to employers. But it’s part of Canada’s social contract that is the advantage of living in an advanced industrialized country.

Otherwise, we’ll turn into a modern-day Mexico or India, where the informal economy thrives and large numbers of workers are left behind.

If every worker at Tim Hortons or Walmart is suddenly designated an independent contractor, we’ll simply be creating a new generation of the working poor, stripped of the few protections our social safety net provides.

Hurray for the gig economy. But it needs to be subject to strict regulations that protects workers, and doesn’t just become an excuse for cheap labour.

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