Pizza Delivery Drivers: Employees or Independent Contractors? Commentary on Steiner v MNR.

Pizza Delivery Drivers: Employees or Independent Contractors? Commentary on Steiner v MNR.

 By Michael A. Power with Lydia Potter

Pizza delivery is a big business that relies heavily on drivers to transport fresh, piping hot pizzas right to your door. In most cases, delivery drivers use their own vehicles and pay their own vehicle costs (fuel, insurance, and maintenance) to deliver those pizzas to you.  In exchange, business owners usually pay delivery drivers a flat fee for every pizza delivered. Drivers may also get to keep any tips they collect.

Many pizza companies consider their delivery drivers self-employed independent contractors. Drivers may even sign independent contractor agreements with business owners, stating they are not “employees.” One important consequence of being considered self–employed is that such drivers will generally not qualify for Employment Insurance benefits if they lose their jobs.

However, notwithstanding what business owners say, pizza delivery drivers could actually be employees of the pizza businesses who hire them—even if they sign contracts saying they are self-employed independent contractors.

In Steiner v. MNR,[1]  driver Vita Steiner signed an independent contractor agreement with the owner and operator of a Pizza 73 franchise and began work in March 2003. She used her own vehicle to deliver pizzas for a fixed amount (initially $2.80 per pizza; later, $3.50 per pizza plus any tips she received). Despite working roughly full-time hours exclusively for one Pizza 73 franchisee, Steiner’s income as a delivery driver was minimal. She nonetheless continued the work for over six years until she was fired by the owner in August, 2009.

After losing her job, Steiner applied for Employment Insurance benefits as an employee. She was initially granted the benefits, but the franchise owner successfully appealed on the basis Steiner was a self-employed independent contractor. Steiner then further appealed to the Tax Court of Canada [the “Court”], with representation from the ECLC.

The Court ruled that Steiner was, in fact, an employee of Pizza 73.

In coming to that decision, the Court held that “evidence regarding the totality of the parties’ relationship must be reviewed in order to determine its true nature.”[2] This analysis was necessary, despite a signed Carrier Agreement labeling Steiner an independent contractor.

The Court applied the Wiebe Door[3] four-part test to determine the true nature of Steiner’s relationship with Pizza 73. The four factors are:

  1. Control,
  2. Ownership of tools,
  3. Risk of loss/chance of profit, and
  4. Integration

The fact that Steiner used her own vehicle for deliveries and was responsible for vehicle expenses, including insurance and repairs, indicated a contractor relationship. She had ownership of the delivery vehicle “tool” required for her job. However, there was also evidence that Pizza 73 provided her with their tools, as they gave her delivery bags, pizza delivery boxes displaying the corporate logo, and debit and credit card machines.

Although there was, then, at least one factor supporting the franchisee’s position that Steiner was a contractor, the Court found the evidence supporting Steiner’s position that she was an employee more compelling. A hallmark of an employer-employee relationship is a high degree of control by an employer over the worker: when an employer controls where, when and how the work is to be performed. Here, Pizza 73 controlled Steiner’s delivery activities. They established her hours and shifts, and while Steiner could request a day off, granting her request was entirely within Pizza 73’s discretion. Further, she had no input into the amount of the delivery fee; independent contractors establish their own fees for service.

Regarding chance of profit and risk of loss, there was little to no opportunity for Steiner to increase her profit. She had no customer base and could not build one, as the customers belonged to Pizza 73, not her. Pizza 73 controlled the delivery fee that could be charged, the number of shifts she worked, and the number of deliveries she made.  Similarly, there was very little risk of loss, as Steiner was not personally required to buy the pizzas before delivering them. If a customer refused a pizza, the loss was suffered by Pizza 73.

Lastly, Steiner was fully integrated into Pizza 73’s business. She worked the shifts assigned to her by the owner, and delivered products in company branded packaging. At the end of every shift, she had to account to the owner for all money collected from customers. In fact, her work was essential to the business’ success: pizza delivery constituted 60-70% of the franchise owner’s earnings.  The Court noted that Pizza 73 had a pizza delivery driver handbook that included:

[D]irectives respecting dress code, delivery preparation, planning the delivery route,  handling the product, how to deal with customers at the door, payment policies, problem solving and professional driving suggestions.  The aim of this Handbook was to control and direct the drivers in the performance and completion of their deliveries, that is, the “where, when and how” of their job.  It even went so far as to provide direction on how to properly deal with and accept tips from customers.[4]

After assessing the totality of the evidence, the Court found that Steiner was, in reality, an employee of the Pizza 73 franchisee.

This was a significant ruling for Steiner, as not only did it mean she was entitled to Employment Insurance benefits but, as an employee, she could advance claims for wrongful dismissal and unpaid wages calculated on an hourly rate basis.

The case could also have much wider impact—it could be precedent-setting for other pizza delivery drivers who sign independent contractor agreements. Depending on the facts, many or even most drivers may actually be employees of the businesses paying them, thereby obligating business owners to comply with the Employment Standards Code. [5] Drivers who are employees are entitled to at least minimum wage, as well as vacation and general holiday pay.

Steiner opens the door for delivery drivers to access the rights and benefits awarded to employees of the businesses they serve. Until those rights are universally accepted, remember Vita Steiner when you order a pizza and consider what to tip.

[1] 2011 TCC 146 [“Steiner”]

[2] Ibid at para 11.

[3] Wiebe Door Services Ltd. v  M.N.R. (1986), 87 D.T.C. 5025 (F.C.A.)

[4] At para 23.

[5] Employment Standards Code, c E-9 RSA 2000, as amended.

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About Michael Power

Michael is a staff lawyer at the Edmonton Community Legal Centre where he serves low income clients. His primary areas of practice are employment law, housing, administrative law and civil litigation. After graduating with a B.A. in political science from Saint Mary’s University in 1979 and an LL.B. from Dalhousie Law School in 1982, he was called to the Saskatchewan Bar in 1984 and to the Alberta Bar in 2002. Michael has extensive legal experience gained from private practice and as in-house counsel. As a member of the civil law team at ECLC, Michael has been able to actively pursue his interest in improving access to justice for those living with poverty.
This entry was posted in Civil Litigation, Employment Law, Legal Resources, Poverty law, Public Policy, Social Benefits and tagged , , , , , , , , , , , , , . Bookmark the permalink.

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