A lawsuit targeting Winnipeg entrepreneurs is bad for everyone

A legal win for the plaintiff would mean money for lawyers and a marginal payout for drivers. And it could cripple the business

Lee Harding: Skip the Dishes

SkipTheDishes driver Charleen Pokorik wants a different job. More precisely, she wants to do the same job but for the company to cover everything. Its founders left jobs like that to form the company, but she won’t do the same to be paid in the manner she wants. The result is a class action lawsuit launched by a Winnipeg driver via two Winnipeg law firms against an internationally-successful Winnipeg start-up. It almost goes without saying that the lawsuit is bad for Winnipeg, but the result might be worse for everyone.

Skip began with an idea. Josh Simair was an investment banker for the Royal Bank who often ordered meals with his colleagues as they worked long hours. He realized people like him could save valuable time if an online service company delivered meals. He and his brother Chris, who did IT at Cameco in Saskatoon, abandoned the security of their paying jobs and started SkipTheDishes. They set up headquarters in Winnipeg and expanded to many mid-sized Canadian and American cities.

By now they operate in 110 cities and serve 14,000+ restaurants and their customers, laying claim to the fastest-growing food delivery company on the continent. The company currently employs 1800 staff, and there are tens of thousands of independent couriers on the network Canada-wide. It processes millions of orders a month from its downtown Winnipeg headquarters. Imagine how many tax dollars come to Winnipeg.

Enter Charleen Pokornik. She started driving for Skip in November of 2016. As such, she is paid $4 to $7 for each meal she delivers, plus tips. Expenses are up to her. She wants guaranteed hourly pay and benefits, with all her expenses covered instead. Her employers left regular paying jobs to rely on their own performance and efficiency, but Pokornik would rather sue the ones paying her to do the same than move to a different job.

This author worked in a similar arrangement to Pokornik’s for more than seven years. As a commission-based agent for a non-profit advocacy group, I drove 50,000 km annually all over the countryside to renew annual support. I had no salary or benefits or expenses covered. I kept 40 per cent of whatever funds I raised, with bonuses related to money from new supporters in a given week. Such a role rewards ambition and ensures the most efficient delivery of service possible, which is to the benefit of the organization, the contributors, and the independent contractors.

The model of the sharing, or “gig”, economy stands in stark contrast to the entitlement mentality found in some millennials and the labour movement. Emily Nargang, a senior researcher with the Canadian Labour Congress, insists “the most innovative aspect isn’t the technology itself, but actually the expansion of this exploitative business model.”

Two Winnipeg law firms see dollar signs in a class action lawsuit against a growing business. How ironic that both they and their plaintiff are pursuing economic profit involving expenses and no guarantee of success by attacking an entrepreneur doing just that. The only possible exception is if someone else, such as the unions, are bankrolling this effort to keep Skip down.

It takes tremendous time, money, and resources to have a legal fight. Will there be any resources left for the company to pursue more growth? Would it even want to, amidst financial uncertainty in the potentially high costs of legal fees, settlement payouts, legal fees, tax repercussions, organizational restructuring, accounting and payroll changes, and the like? While fellow Winnipeggers tie them in ropes, will they watch their growth potential permanently lost as other upstarts steal their model and capture other markets?

A legal win for the plaintiff would mean money for lawyers and a marginal payout for drivers. But a wonderful entitled future for drivers is unlikely to ensue. Legal costs and payouts could cripple this upstart company, followed by compliance costs that could wipe out profits. They cannot be covered by fee increases, since it is already high enough for some restaurants to stop using the service. Besides this, human nature suggests an employee with a guaranteed wage and benefits will never work as hard or efficiently as a contractor who is paid in direct correlation to their output. Compensation for drivers will drop accordingly, then be further gutted by payroll deductions for those coveted benefits. Low wages minus deductions could become an even harder sell for drivers than the former arrangement.

In the end, drivers like Pokorik might take their settlement money and look for new jobs like they should have in the first place, departing like a parasite that abandoned the host it made sick. Lawyers will laugh and labour leaders will celebrate while entrepreneurs are discouraged, consumers jilted, government coffers smaller, and drivers little better. If the plaintiffs win, citizens should push for a change in labour laws.

A loss for Skip pegs losing on all Winnipegers.

Lee Harding is research fellow for the Frontier Centre for Public Policy.


The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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