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Life in the Gig Economy: Good for Companies, Bad for Workers

New business models rely on stripping employees of their rights. First in a series.

Paul Willcocks 1 Jan

Paul Willcocks is a journalist and former publisher of newspapers, and now an editor with The Tyee.

Every scam needs a good name.

Like the “gig economy,” with its suggestion of people bouncing between interesting assignments and taking time off for personal projects, freed from the constraints of traditional work.

Except it’s a con. The gig economy is just the latest way for employers to undermine workers’ rights and drive down wages, cloaked — shabbily — in babble about freedom and independence and the magical powers of technology.

Uber and its multiplying clones have built a business model that depends on stripping workers of rights. No benefits, pension or job security. Little or no opportunity to unionize. (Some Toronto Uber drivers took the first steps toward joining the United Food and Commercial Workers in June, but the union hasn’t applied for certification.)

The quality of work has been declining in Canada for five decades. Things that were considered the norm for most large employers — benefits, pensions, job stability — have largely been weakened or eliminated. The unionization rate has been falling since 1984; research shows unionization brings higher wages.

But the gig economy takes the attack on workers to a new level.

Governments set basic ground rules around work life.

In British Columbia, the law guarantees a minimum wage of $13.85 — about $29,000 a year. The Employment Standards Act sets out basic requirements for employers on overtime and vacation pay, severance if they fire people without cause and hours of work. Mingy, but at least some protection. And the Labour Relations Code sets out the process for employees who decide to form a union and bargain collectively.

But the companies trying to profit from the gig economy are working to dodge even those few protections.

Their business model depends on exploiting a loophole in the laws. They claim the people who work for them aren’t employees. They are “independent contractors,” the companies say, and that means legislation guaranteeing basic workplace rights don’t apply.

It’s a stretch. The test for whether a person is an employee or an independent contractor includes factors like “how much direction and control the worker is subject to, whether the worker operates their own business and has their own clients... whether the work they are doing is integral to the business and whether there is an ongoing relationship.”

By any reasonable assessment, a driver whose work is controlled by a company is an employee.

The companies’ argument is being challenged in the courts. Skip the Dishes and Uber both face lawsuits in Canada.

Part of their strategy has been to make drivers sign agreements giving up their rights.

Skip the Dishes requires drivers to sign an agreement focused on confirming their contractor status. It also denies drivers the chance to act together in dealing with the company. “Any claim you may have must be brought individually... and not as a representative plaintiff or class member, and you will not join such claim... or participate in a class action lawsuit, collective or representative proceeding of any kind.”

Uber’s agreement bars drivers from raising issues in Canadian courts or tribunals. Instead, they must take any concern to an arbitration panel in the Netherlands, with an upfront cost for the driver of US$14,500. (The Ontario Court of Appeal ruled the provision “unconscionable” and “invalid.” Uber is appealing to the Supreme Court of Canada.)

Meanwhile, governments watch and do nothing to update employment laws to reflect the new workplace reality.

The gig economy companies are already playing a huge role. Uber alone employs 90,000 drivers in Canada. That’s almost twice as many jobs as forestry, fisheries, mining and oil and gas provide in B.C.

And companies are steadily pushing into new areas. Uber Works, launched in two U.S. cities, aims to place people in all sorts of jobs — cleaners, cooks, office workers. If successful, it could dramatically expand and legitimize the gig economy.

Uber’s launch a decade ago was widely hailed as the next step in the “sharing economy,” another clever and wildly misleading name.

Airbnb, for example, promised to connect travellers with people who had a spare room; instead it’s become a platform for investors who have taken thousands of rental units off local markets. Ride sharing was pitched as a way to connect drivers heading somewhere with others willing to share costs. Instead, we got Uber and Lyft.

The companies — and some drivers — argue they provide opportunities for flexible, independent work that suits many people.

Over the course of this series, The Tyee will dig into whether that’s true, whether the benefits outweigh the significant damage to employee rights, where this could lead — and what can be done to reform the industry.

Coming tomorrow: A major Canadian survey looked at how gig work affects people. The results raised serious questions about the damage being done by precarious employment. Please note that our comment threads are currently closed until Jan. 2.  [Tyee]

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