Erik Adolph, a former UberEats driver, (Uber's meal delivery service) filed a California labor lawsuit in Orange County Superior Court in 2019, claiming Uber misclassified employees as independent contractors to avoid reimbursing drivers for work expenses, which they would be covered for if they were employees. Adolph later amended his complaint to seek civil penalties against Uber under PAGA rather than arbitration, but Uber argued that any disputes should be settled by arbitration – a PAGA claim would likely not go well for Uber.
On appeal Uber argued that, because Adolph is an independent contractor he cannot bring a PAGA claim: the California labor code states that PAGA is only open to an "aggrieved employee,” and furthermore the initial question of whether Adolph is an employee must be determined in arbitration as per his employment contract with Uber. But the appellate court was not swayed. "California case law is clear that the threshold issue of whether a plaintiff is an aggrieved employee in a PAGA case is not subject to arbitration," the court stated and Law360 reported. The appellate court panel went on. "Although the arbitration provision does not explicitly grant to the courts the authority to determine whether a PAGA claimant is an aggrieved employee, the provision's retention of all other authority over a PAGA claim in the court makes this a fair inference.”
The National Institute for Workers' Rights explains succinctly why forced arbitration is preferred by Uber and other gig compaines, to the detriment of workers. Here are a few highlights from "No Due Process, No Rights: How Forced Arbitration Enables Misclassification in The Gig Economy":
- Forced arbitration enables misclassification, allowing both Uber and Lyft to continue to classify their drivers as independent contractors.
- A forced arbitration clause in your employee contract means that you cannot decide whether you want to pursue arbitration instead of going to court
- Arbitration allows gig companies to keep misclassification cases out of court; it is typically binding and doesn’t allow for appeals.
- Arbitration keeps an employer’s alleged misconduct out of the spotlight, meaning it can keep discriminating, misclassifying and violating other labor laws to other current and future employees and nobody would know otherwise.
- An employer who has a forced arbitration policy typically will save money on legal costs, but employees are less likely to win in arbitration than in court. This means that you may get stuck with your employer’s legal costs in addition to your own if you lose.
- Parties can choose the decision maker in arbitration hearings. For instance, Uber will choose a specific arbitrator who has a preference for classifying drivers as independent contractors rather than employees.
- You may not have the right to an attorney in a potential arbitration – read your employment contract carefully.
PAGA and Arbitration
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One of Adolph's lawyers, Aashish Desai of Desai Law Firm APC, Tuesday said he was confident his client's case would hold up, even after the Supreme Court's ruling in Viking River Cruises Inc. v. Angie Moriana, which is currently mulling over whether labor violation claims workers bring through PAGA can dodge arbitration. The case is Erik Adolph v. Uber Technologies, case number G059860, in the Court of Appeal of the State of California, Fourth Appellate District.