Uber’s attempt to keep its drivers’ complaints out of court may set up the ride service for its biggest legal potholes yet — and help those drivers get some of the compensation they deserve.
For several years, drivers in this new gig economy have tried to get fair payment from Uber, such as enough to cover gas and vehicle maintenance in addition to fair wages. A key sticking point: Uber classifies them as independent contractors rather than employees. Another beef: until mid-2017, Uber didn’t allow drivers to accept tips.
It’s not uncommon for companies to try to handle legal hangups — or, more bluntly, to squash class actions and repress employees — by requiring individual arbitration. Companies promote arbitration as an inexpensive and quick way to resolve disputes, but for wronged employees or consumers, this promise often proves to be a false one.
Uber requires arbitration in its terms of service contract, unless drivers opt out within 30 days of signing. But Uber is jamming up its own arbitration process by refusing to pay the fees for claims brought by drivers, as promised in its contract. At $1,500 for the initiating filing fee alone, that’s no small change. The figures are staggering: As of November 13, at least 12,501 arbitration demands had been filed. Though the matters were filed at least three months prior, Uber had paid only 296 of the filing fees. Of those, arbitrators had been appointed to 47 matters, and in only six of those matters had Uber paid the arbitrator retainer fee to advance the process.
Chipotle took a similar tack with employees who alleged wage theft. By requiring workers to sign an arbitration clause as a condition of employment, it prevented class-action suits. The thinking of employers like Chipotle and Uber goes like this: With cases kept to relatively small dollar figures, individual employees will have a hard time finding legal representation.
In the face of such tactics, workers may be tempted to give up. But it can be worth it to stay the course. The situations now appear to be unraveling for the large companies, despite a 5-4 Supreme Court ruling in May that came down on the side of employers requiring arbitration agreements as a condition of employment.
In the case of Uber, which appears to be reneging on its own contract by recklessly ignoring arbitration efforts, drivers thus far denied arbitration have gone to court. An early December filing with the U.S. District Court in San Francisco seeks to compel Uber to arbitrate, pay attorneys’ fees and costs, and award any other relief deemed right. The arbitration fees alone could cost Uber near $19 million.
With Uber’s reported plans to go public looming, the company may be softening toward a deal. TechCrunch reported in late December that Uber had offered a tentative settlement of 11 cents per mile driven for the company. That offer comes with strings attached: releasing Uber from employee misclassification claims.
In Chipotle’s case, employees already had been contacted for a potential class-action lawsuit when the Supreme Court ruling landed. Thus, the law firm helping them was able to continue the case in arbitration.
Chipotle complained that this wasn’t fair; the judge had no sympathy, saying the company was trying to drag its feet and complicate a process that Chipotle itself had required, and calling those actions “unseemly.”
There are lots of details here, but it all boils down to two key takeaways:
- Be wary of employers that present the oft-false promise of arbitration.
- If you’re a victim of poor treatment by your employer, don’t give up — particularly if you know you’re not alone.
If you’ve been mistreated by your employer, Contact Keller Grover for a free consultation. In more than 25 years litigating fraud and employment cases, Keller Grover has recovered billions for its clients.