Monday, May 14, 2018

Will Arbitrators Decide the Scope of the Gig Economy?

My colleague and co-editor of this blog, Judge David B. Torrey, pointed out to me recently that several of the gig “worker” contracts contain mandatory binding arbitration provisions. Preliminary to the question of whether a worker is an employee, is the question of who makes that determination. You could be excused for imagining it would be a court, but that is quite possibly not the case.

Let’s consider an easy hypothetical. Imagine an individual working for the supermarket delivery chain “Instacart.” The individual is hurt in the course of the work. The Instacart “master” agreement requires that virtually all employment disputes be arbitrated. 

[T]he Parties agree that to the fullest extent permitted by law, ANY AND ALL DISPUTES OR CLAIMS BETWEEN YOU AND INSTACART shall be exclusively resolved by final and binding arbitration by a neutral arbitrator, including without limitation any and all disputes or claims BETWEEN YOU AND INSTACART, whether in contract, tort, or otherwise, relating to the formation (including unconscionability and invalidity), existence, breach, termination, interpretation, enforcement, validity, scope, and applicability of the Agreement, or the Services agreed to herein, or any claim on any basis under federal, state, or local law, which could otherwise be heard before any court of competent jurisdiction. By signing this Agreement, and unless otherwise stated in this Arbitration Provision, the Parties hereby waive their right to have any dispute, claim, or controversy decided by a judge or jury in a court.

Now suppose the worker files an employment lawsuit. The company takes the position that the worker is not covered by the applicable employment statute. I think that under existing arbitration precedent the dispute will very likely be subject to arbitration. As many readers will already know, there is virtually no meaningful judicial review of arbitration awards. Thus, in addition to the evolving disuniformity of the substantive statute law of employee status, procedural disuniformity may soon be added: the private ordering of employee status.

I should point out that, under the Instacart agreement, individuals have the right to opt-out of the agreement within 30 days. I leave it to the reader to decide whether that is a sufficiently-long time to be meaningful.

Judge Torrey also pointed out to me that the TaskRabbit agreement very unusually excludes workers’ compensation, and most other types of administrative employment, claims from its scope. (It is not the case for the Instacart agreement noted above or for, e.g., Handy, Inc.) The rub there, however, is that it might easily be argued that whether an individual is an employee is antecedent to the question of whether the individual in fact possesses a workers’ compensation claim and must therefore be decided by an arbitrator. I think the waiver language is broad enough to render such an argument colorable:

This agreement to arbitrate, contained in Section 20, (“Arbitration Agreement”), is governed by the Federal Arbitration Act and survives the termination of this Agreement or your relationship with Company. Claims include, but are not limited to, any dispute, claim or controversy whether based on past, present or future events arising out of or relating to: this Agreement and prior versions (including the breach, termination, enforcement, interpretation or validity thereof), the TaskRabbit Platform, services, Tasks, your relationship with Company, the threatened or actual suspension, deactivation or termination of your User Account or this Agreement, payments made by you or any payments made or allegedly owed to you, any city, county, state or federal wage-hour law, compensation, breaks and rests periods, expense reimbursement, wrongful termination, discrimination, harassment, retaliation, fraud, defamation, trade secrets, unfair competition, emotional distress, any promotions, offers made by Company, breach of any express or implied contract or breach of any express or implied contract or covenant, claims arising under federal or state consumer protection laws; claims arising under antitrust laws, claims arising under the Telephone Consumer Protection Act and Fair Credit Reporting Act; and claims arising under the Fair Labor Standards Act, Civil Rights Act of 1964, Uniform Trade Secrets Act, Americans With Disabilities Act, Age Discrimination in Employment Act, Older Workers Benefit Protection Act, Family Medical Leave Act, Employee Retirement Income Security Act (except for individual claims for employee benefits under any benefit plan sponsored by Company and covered by the Employee Retirement Income Security Act of 1974 or funded by insurance), and state statutes, if any, addressing the same or similar subject matters, and all other federal and state statutory and common law claims. All disputes concerning the arbitrability of a Claim (including Claims about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement) shall be decided by the arbitrator, except as expressly provided below.

YOU ACKNOWLEDGE AND UNDERSTAND THAT YOU AND COMPANY ARE WAIVING THE RIGHT TO SUE IN COURT OR HAVE A JURY TRIAL FOR ALL CLAIMS, EXCEPT AS EXPRESSLY OTHERWISE PROVIDED IN THIS ARBITRATION AGREEMENT. THIS ARBITRATION AGREEMENT IS INTENDED TO REQUIRE ARBITRATION OF EVERY CLAIM OR DISPUTE THAT CAN LAWFULLY BE ARBITRATED EXCEPT THOSE CLAIMS AND DISPUTES WHICH BY TERMS OF THIS ARBITRATION AGREEMENT ARE EXPRESSLY EXCLUDED FROM THE REQUIREMENT TO ARBITRATE.

In addition, the terms of the overall agreement include a “workers classification” provision, in Section 13, that would likely make it easy for a court to conclude that such issues were contemplated by the parties to be reserved for arbitration.

While I think parties could agree to reserve such questions for court determination, I do not believe these "agreements" manifest such an intent.

Michael C. Duff

http://lawprofessors.typepad.com/workerscomplaw/2018/05/will-arbitrators-decide-the-scope-of-the-gig-economy.html

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