Proposition 22, or “Prop 22” as it is familiarly known, was passed by the state legislature to ensure that persons who work for gig work apps such as Uber and Door Dash received employment benefits that are equivalent to benefits provided by traditional employers. A California-based driver advocacy group, Rideshare Drivers United (RDU), has now launched an attack on certain the manner in which some gig employers are using the statute to compel binding arbitration.
Application of Prop 22
When Prop 22 was passed, some gig employers began offering Terms of Service contracts that included increased fringe benefits, such as salaries guaranteed to be at least 120% of the state minimum wage. These same employers also included a clause in the Terms of Service Agreement that requires employees to agree to mandatory binding arbitration to resolve any disputes.
RDU is arguing that the inclusion of a mandatory arbitration provision in these contracts effectively takes away many of benefits that Prop 22 was intended to guarantee. As one labor attorney argues, “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.”
Why employers prefer arbitration
Employers pushed the arbitration remedy as a means of limiting their exposure for the misclassification of workers as independent contractors instead of fulltime employees. Companies who rely on gig workers, such as Lyft, DoorDash, Grubhub, and UberPostmates, have relied on mandatory arbitration clauses for years to prevent workers from starting lawsuits over the issue of misclassification. Most employers regard arbitration as far cheaper than litigation. Forced arbitration also reduces the number of discrimination cases and improves the employer’s chances of prevailing.
Any employee who believes that he or she is involved in a work environment that misclassifies permanent employees or suppresses legitimate discrimination claims may wish to seek advice from an experienced labor law attorney. A knowledgeable labor law attorney can provide a helpful evaluation of the situation, provide advice about what remedies may be available and commence an appropriate action to eliminate the illegal condition.