Gig Workers Must Opt Out of Arbitration to Enforce Prop 22 Benefits, Rights Group Says

Proposition 22 in California offers some benefits to workers, but Rideshare Drivers United says Terms of Service forcing private arbitration will prevent them from being enforced.
January 11, 2021, 6:27pm
Gig Workers Must Opt Out of Arbitration to Enforce Prop 22 Benefits, Rights Group Says
Image: gahsoon via Getty Images

After Proposition 22 passed in California, gig work apps such as Uber and DoorDash began offering some benefits to workers. The benefits promise driver pay that is 120 percent of the state’s minimum wage, along with a healthcare stipend and expense coverage, though they still fall short of traditional employment. 

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The problem, according to California-based driver advocacy organization Rideshare Drivers United, is that those benefits may need to be enforced through the legal system. 

According to Rideshare Drivers United (RDU), some gig work app Terms of Service are designed to force workers into private arbitration for complaints, rather than going to court. To ensure that workers are in the best possible position to fight for the benefits promised by Prop 22 should companies fail in their obligations, RDU is advising workers to opt out of arbitration. 

"Companies have more leverage in arbitration because they control the vast majority of the evidence, and workers lose their right to a jury and the appeals process," said Ben O'Donnell, a labor attorney, in a statement.  

Workers have 30 days after agreeing to Terms of Service to opt out, and RDU has created a webpage  for drivers to easily opt out of agreements for Uber, Lyft, DoorDash, Postmates, Instacart, and Grubhub. 

While Instacart, Grubhub, and Uber-Postmates have all had forced arbitration clauses in their Terms of Service for years, DoorDash and Lyft updated theirs in December to include arbitration agreements. 

"Prop 22 is just the latest in a long line of ways the gig giants take advantage of workers," said Chris Arellano, a Bay Area driver and RDU organizer, in a statement. "By forcing us into arbitration, drivers and delivery workers are made to stand alone when we fight back legally. But we're not backing down, and we won't let new arbitration mandates shut down our fight."

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The goal of arbitration is to avoid the court system. Forcing drivers to individually and privately arbitrate each claim drastically reduces the risk posed to investors and the company itself. In its S-1 filing documents, Lyft warned that the company was constantly fighting "claims, lawsuits, arbitration proceedings, administrative actions, government investigations and other legal and regulatory proceedings” at every level of governance due to its longstanding misclassification of drivers as independent contractors. This introduced a constant investment risk of "adverse business, financial, tax, legal and other consequences'' from the ongoing litigation they risked simply by operating. 

Notably, Lyft said it was subject to lawsuits and arbitration proceedings challenging its misclassification of workers as independent contractors. 

DoorDash admitted similar risks in its IPO documents. Using identical language to Lyft, the company warned it was subject to lawsuits and arbitration  that could challenge its misclassification of delivery workers. Reclassification would require DoorDash to "significantly alter our existing business model" and as a result the company would expect this to "have an adverse effect on our business, financial condition, and results of operations."

There are also other reasons a driver or rider might want to exercise their right to take the companies to court besides classification or Prop 22 benefits. Gig companies face legal threats related to injury, discrimination, property damage, and sexual assault. In Uber’s case, the company has resorted to creative attempts to stonewall legal and regulatory proceedings. 

Since the 1990s, forced arbitration's use has doubled and is now used on over 60 million workers. As the American Civil Liberties Union notes in a 2019 brief on the practice, these agreements "are prevalent in female dominated industries—57.6 percent of female workers are subject to the practice—as well as in low-wage fields and industries dominated by women of color."

With forced arbitration, workers are less likely to pursue discrimination cases, less likely to have evidence properly heard, less likely to win, and less likely to get satisfactory rulings or awards. Arbitration occurs in secret and is usually final with no right to appeal—a sharp contrast from the gig labor platforms, which infamously appeal any decision they disagree with.

Uber, Lyft, DoorDash, Grubhub, and Instacart did not immediately respond to Motherboard’s request for comment.