Uber’s Arbitration Clause Ruled Invalid by Canada’s High Court

One of the biggest arrows in Uber’s quiver was snapped clean in half by the Supreme Court in Canada today. It’s about damn time.

As we’ve discussed over and over, again and again, Uber is a wage theft scheme wrapped in the facade of a technology company. It accomplishes this through systematic misclassification of its drivers, whose contracts stipulate that they’re independent contractors and therefore unentitled to costly benefits like minimum wage, healthcare, and overtime pay. But the company, and many like it, also protect themselves by including arbitration clauses in those same contracts.

In the simplest of terms, signing an arbitration clause waives your right to take your employer (or the platform that refuses to admit it’s your employer) to court. This not only prevents individual drivers from recuperating rightful damages or lost wages—something they’re not likely to do because of the cost of litigation—but also prevents them from joining together to file class-action lawsuits.

Some arbitration clauses across the tech industry are simply mandatory. And while in the most recent versions of Uber’s driver contracts reviewed by Gizmodo signees are allowed to opt-out, they must do so within a narrow timeframe, and instructions for opting out are buried deep in a Terms of Service-like agreement, which studies have shown most people do not read.

Well in Uber Technologies Inc. v. Heller, the Supreme Court to the North has come to a staggeringly obvious conclusion—albeit one our own courts seems hesitant to come to terms with: these sorts of agreements aren’t legally enforceable.

The technical term of art here is “unconscionable,” which is to say they’re so plainly unfair that they can’t be enforced. A variety of factors went into that decision. For instance, the tremendous gap in power between the two parties, Uber (a multinational corporation) and David Heller (a single UberEats driver), And the fact that Heller had no say in negotiating the clause’s presence in the contract.

More right-leaning minds—and yes, I see you in the comments—will crow that he “should have read the contract” or Heller should have merely “taken a different job.” First off, you’re being a dick. But the Canadian Supreme Court had thoughts about this too because nowhere in that contract was it made clear that the costs of pursuing arbitration would likely cost Heller approximately a year’s worth of wages from UberEats. In other words, arbitration would keep Heller, or other contractors like him, from seeking justice. “There is, therefore, no good reason to distinguish between a clause that expressly blocks access to a legally determined resolution,” Justice Russel Brown wrote, “and one that has the ultimate effect of doing so.”

“We thank the court for today’s ruling, which we’ll review more closely over the coming days. We can, however, share our plans to amend our contracts to align with the court’s principles,” an Uber spokesperson told Gizmodo. “Going forward, dispute resolution will be more accessible to drivers, bringing Uber Canada closer in line with other jurisdictions. We are proud to offer a flexible earning opportunity to tens of thousands of independent drivers throughout Ontario.”

Sure, it’s always a treat to see Uber get dunked on in dense legalese, but what does it mean beyond a single favorable ruling?

For starters, think of this as a stronger, more wide-reaching version of California’s Dynamex decision, which has opened the floodgates for regulating gig economy companies—but instead of attacking misclassification, Heller sets arbitration aflame, leaving these companies vulnerable to massive lawsuits. One such case, started by Heller and other Uber contractors, is now set to move forward. The $400 million case, which began in 2017, specifically challenged Uber’s policy of misclassifying drivers. It all comes back around.

Moreover, it’s likely Heller will have ripple effects across similar corporations. As Ewan McGaughey, a lecturer at King’s College of London’s law school, tweeted:

it says unequal bargaining power derives from multiple factors, including ‘wealth.’ This is the true basis of the theory, that property drives unequal bargaining power, which itself perpetuates inequality [and] it broadens the unconscionability doctrine to include inequality of bargaining power.

All in all: another especially riveting chapter in Uber’s never-ending losing streak.