Uber's Attempts To Silence Drivers May Have Backfired |
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Uber's Attempts To Silence Drivers May Have Backfired |
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Uber's Attempts To Silence Drivers May Have Backfired
Above photo: A judge has ruled that Uber's requirements of its drivers are
unfair and illegal. (Flickr / Joakim Formo)
Much has been made over how Uber, the car service that enables users to hail
a car within minutes of pressing a few keys on their smartphones, is
jumpstarting the "gig-economy." Frequently lost amid the discussion over
disrupting existing industries, however, is the fact that
workers in this new economy often get the short-shrift. That fact was made
extremely evident in a recent order against the company written by U.S.
District Judge Edward M. Chen in which he
found that the terms Uber imposes upon its drivers as a condition of driving
for the company, including a forced arbitration clause, are unconscionable
and unenforceable under California law. In plain English, he ruled that the
provisions were so unfair and one-sided in favor of Uber that they could not
be enforced in a court of law.
The case was brought by Ronald Gillette and Abdul Mohamed, who began driving
for Uber in California in 2013 and in Boston in 2012, respectively. Not only
do riders arrange their rides via smartphone, but drivers also arrange to
work for Uber via smartphone. When Gillette and Mohamed decided to work for
Uber, they logged on to the app to join the Uber "fleet" and a message
popped up on their screens asking if they agree to "all the contracts"
listed. If they indicated they agreed, another message popped up that said
"PLEASE CONFIRM THAT YOU HAVE REVIEWED ALL THE DOCUMENTS AND AGREE TO ALL
THE NEW CONTRACTS." The two choices were "YES, I AGREE" and "NO." After
clicking the "YES, I AGREE" option, both Gillette and Mohamed gained access
to the app and began driving for Uber.
Gillette was subsequently terminated by Uber because "'something had come
up' on his consumer background report." Mohamed's access to the app was
subsequently revoked "at least in part as a 'result of information obtained
[by defendants] through [a] Consumer Reporting Agency'," and he lost his
ability to pick up passengers as an Uber driver. This was only the beginning
of their troubles with Uber.
To understand how forced arbitration squeezes workers and deprives them of
the protections otherwise guaranteed by law, we have to get into a bit of
legalese. The terms to which Gillette and Mohamed agreed by clicking the
"YES, I AGREE" option on their phones included a clause stipulating that any
dispute between Uber and the driver will be resolved in an arbitration
proceeding rather than in open court.
As almost any first year law student can tell you, a party is bound by the
contract she signs. Even if a court determines that a contract was validly
made, however, there are a number of bases upon which courts can deem
contracts unenforceable. These include, among others, contracts considered
to be against the law, contracts signed under duress and contracts that are
unconscionable.
For example, a court wouldn't enforce a contract in which one party
contracts with another to commit a crime because the agreement is against
the law. A court would not enforce a contract signed by someone with a gun
to their head as that would clearly constitute duress. Although there is no
one test to determine if a contract is unconscionable, "
gross inequality of bargaining power, together with terms unreasonably
favorable to the stronger party," may lend credence to an argument that a
contract or a particular clause within it is unconscionable.
After evaluating Uber's arbitration provision, Judge Chen found that the
clause was, in fact unconscionable, and thus unenforceable. In coming to
this decision, Judge Chen reviewed all of the language in Uber's contracts,
taking readers of his opinion on a tour of the worst aspects of this
one-sided deal.
list of 5 items
First, the clause prohibited the plaintiffs from bringing enforcement
actions on behalf of other individuals-an essential tool for enforcing civil
rights laws-as provided for by California state law.
Second, the clause required the plaintiffs to pay a portion of the
arbitrator's costs and fees, whereas in court they would not have to pay a
judge for his or her time.
Third, the clause required that any arbitration proceeding be confidential,
contrary to open access to court proceedings.
Fourth, in a brazen move, while Uber denied its drivers access to court and
forced them to proceed to arbitration, it carved out a provision which
enabled the company to bring a case in court under certain circumstances.
Fifth, and last, the provision allowed Uber to modify the terms of the
contract at any time, without granting its drivers the same ability.
list end
Arbitration is an alternative method of dispute resolution that bypasses our
civil justice system. It can be an appropriate forum when it is knowingly
and voluntarily agreed to by the individual as well as the company
after a dispute arises.
But a recent
study found that outcomes in arbitration for workers-win rates, damage
awards, and settlement amounts-are starkly inferior to outcomes workers
receive when they go to court. As one federal judge lamented in a forced
arbitration
case, "there is a reason that arbitration is the favored venue of many
businesses for deciding employment disputes, and it is not to ensure that
employees are afforded the best chance to have their claims adjudicated by a
judge or jury picked from the community."
Arbitration proceedings are
not governed by the same rules of procedure which exist in a court
proceeding and are designed to ensure fairness and due process. For example,
those who have been wronged are generally able to gain access to the key
documents that the other side possesses and that are often crucial to prove
their cases. In contrast, arbitration proceedings are often secret and
deprive aggrieved individuals the opportunity to present their case to a
jury of their peers. Because arbitration proceedings are secret and not
public, they shield companies that break the law from public accountability
and scrutiny. And arbitration clauses frequently prohibit individuals from
appealing a ruling against them.
Even worse is the fact that forced arbitration clauses such as the one used
by Uber are on the rise. In 2010,
27 percent of non-unionized workers-or 36 million people-were subject to
forced arbitration clauses. That figure is likely much higher now as the
Supreme Court has issued
two
decisions in recent years that have made arbitration even more favorable to
employers.
Indeed, management-side attorneys have written about how
forced arbitration clauses help their clients' bottom lines, especially
those provisions that include language banning workers or consumers from
joining together to form a class to obtain collective relief. A 2015
report by a national management firm shows that the percentage of employers
using forced arbitration and class action bans more than doubled from 21% in
2011 to almost 46% in 2014.
If Uber had its way, its drivers would be bound to address disputes with the
company through forced arbitration in a secret, private tribunal. The
drivers would also be prohibited from joining together in class action
suits-which is often the only way individuals can hold large companies
accountable for their wrongdoing.
Thankfully, Judge Chen recognized the unfairness that "permeated" Uber's
terms with Gillette, Mohamed, and the other drivers in their lawsuit and
found it unenforceable. Uber has appealed the case to the Ninth Circuit
Court of Appeals-remember, the kind of appeal that is not allowed under
forced arbitration-so we will soon find out if other judges share Judge
Chen's perspective on what is fair and what is not.
For the record, Uber doesn't stop at imposing forced arbitration on its
drivers. Uber also
refuses to classify its drivers as employees and treats them instead as
independent contractors, who are not entitled to the rights and protections
afforded employees.
We need updated laws to handle these new employment arrangements that are
becoming
more and more frequent in our sharing economy. Until we have such laws,
drivers like Gillette and Mohamed will not only be denied the basic rights
and benefits associated with being classified as employees; they will
continue to be subject to a sham system of justice in which they cannot have
their claims heard in open court with the basic protections afforded by a
court proceeding.
CLARK TAYLOR
Clark Taylor is the Paul H. Tobias Attorney Fellow at The Employee Rights
Advocacy Institute For Law & Policy.
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Uber's Attempts To Silence Drivers May Have Backfired
12183655143_5b0d955bdf_z
Above photo: A judge has ruled that Uber's requirements of its drivers are
unfair and illegal. (Flickr / Joakim Formo)
Much has been made over how Uber, the car service that enables users to hail
a car within minutes of pressing a few keys on their smartphones, is
jumpstarting the "gig-economy." Frequently lost amid the discussion over
disrupting existing industries, however, is the fact that
workers in this new economy often get the short-shrift. That fact was made
extremely evident in a recent order against the company written by U.S.
District Judge Edward M. Chen in which he
found that the terms Uber imposes upon its drivers as a condition of driving
for the company, including a forced arbitration clause, are unconscionable
and unenforceable under California law. In plain English, he ruled that the
provisions were so unfair and one-sided in favor of Uber that they could not
be enforced in a court of law.
The case was brought by Ronald Gillette and Abdul Mohamed, who began driving
for Uber in California in 2013 and in Boston in 2012, respectively. Not only
do riders arrange their rides via smartphone, but drivers also arrange to
work for Uber via smartphone. When Gillette and Mohamed decided to work for
Uber, they logged on to the app to join the Uber "fleet" and a message
popped up on their screens asking if they agree to "all the contracts"
listed. If they indicated they agreed, another message popped up that said
"PLEASE CONFIRM THAT YOU HAVE REVIEWED ALL THE DOCUMENTS AND AGREE TO ALL
THE NEW CONTRACTS." The two choices were "YES, I AGREE" and "NO." After
clicking the "YES, I AGREE" option, both Gillette and Mohamed gained access
to the app and began driving for Uber.
Gillette was subsequently terminated by Uber because "'something had come
up' on his consumer background report." Mohamed's access to the app was
subsequently revoked "at least in part as a 'result of information obtained
[by defendants] through [a] Consumer Reporting Agency'," and he lost his
ability to pick up passengers as an Uber driver. This was only the beginning
of their troubles with Uber.
To understand how forced arbitration squeezes workers and deprives them of
the protections otherwise guaranteed by law, we have to get into a bit of
legalese. The terms to which Gillette and Mohamed agreed by clicking the
"YES, I AGREE" option on their phones included a clause stipulating that any
dispute between Uber and the driver will be resolved in an arbitration
proceeding rather than in open court.
As almost any first year law student can tell you, a party is bound by the
contract she signs. Even if a court determines that a contract was validly
made, however, there are a number of bases upon which courts can deem
contracts unenforceable. These include, among others, contracts considered
to be against the law, contracts signed under duress and contracts that are
unconscionable.
For example, a court wouldn't enforce a contract in which one party
contracts with another to commit a crime because the agreement is against
the law. A court would not enforce a contract signed by someone with a gun
to their head as that would clearly constitute duress. Although there is no
one test to determine if a contract is unconscionable, "
gross inequality of bargaining power, together with terms unreasonably
favorable to the stronger party," may lend credence to an argument that a
contract or a particular clause within it is unconscionable.
After evaluating Uber's arbitration provision, Judge Chen found that the
clause was, in fact unconscionable, and thus unenforceable. In coming to
this decision, Judge Chen reviewed all of the language in Uber's contracts,
taking readers of his opinion on a tour of the worst aspects of this
one-sided deal.
list of 5 items
First, the clause prohibited the plaintiffs from bringing enforcement
actions on behalf of other individuals-an essential tool for enforcing civil
rights laws-as provided for by California state law.
Second, the clause required the plaintiffs to pay a portion of the
arbitrator's costs and fees, whereas in court they would not have to pay a
judge for his or her time.
Third, the clause required that any arbitration proceeding be confidential,
contrary to open access to court proceedings.
Fourth, in a brazen move, while Uber denied its drivers access to court and
forced them to proceed to arbitration, it carved out a provision which
enabled the company to bring a case in court under certain circumstances.
Fifth, and last, the provision allowed Uber to modify the terms of the
contract at any time, without granting its drivers the same ability.
list end
Arbitration is an alternative method of dispute resolution that bypasses our
civil justice system. It can be an appropriate forum when it is knowingly
and voluntarily agreed to by the individual as well as the company
after a dispute arises.
But a recent
study found that outcomes in arbitration for workers-win rates, damage
awards, and settlement amounts-are starkly inferior to outcomes workers
receive when they go to court. As one federal judge lamented in a forced
arbitration
case, "there is a reason that arbitration is the favored venue of many
businesses for deciding employment disputes, and it is not to ensure that
employees are afforded the best chance to have their claims adjudicated by a
judge or jury picked from the community."
Arbitration proceedings are
not governed by the same rules of procedure which exist in a court
proceeding and are designed to ensure fairness and due process. For example,
those who have been wronged are generally able to gain access to the key
documents that the other side possesses and that are often crucial to prove
their cases. In contrast, arbitration proceedings are often secret and
deprive aggrieved individuals the opportunity to present their case to a
jury of their peers. Because arbitration proceedings are secret and not
public, they shield companies that break the law from public accountability
and scrutiny. And arbitration clauses frequently prohibit individuals from
appealing a ruling against them.
Even worse is the fact that forced arbitration clauses such as the one used
by Uber are on the rise. In 2010,
27 percent of non-unionized workers-or 36 million people-were subject to
forced arbitration clauses. That figure is likely much higher now as the
Supreme Court has issued
two
decisions in recent years that have made arbitration even more favorable to
employers.
Indeed, management-side attorneys have written about how
forced arbitration clauses help their clients' bottom lines, especially
those provisions that include language banning workers or consumers from
joining together to form a class to obtain collective relief. A 2015
report by a national management firm shows that the percentage of employers
using forced arbitration and class action bans more than doubled from 21% in
2011 to almost 46% in 2014.
If Uber had its way, its drivers would be bound to address disputes with the
company through forced arbitration in a secret, private tribunal. The
drivers would also be prohibited from joining together in class action
suits-which is often the only way individuals can hold large companies
accountable for their wrongdoing.
Thankfully, Judge Chen recognized the unfairness that "permeated" Uber's
terms with Gillette, Mohamed, and the other drivers in their lawsuit and
found it unenforceable. Uber has appealed the case to the Ninth Circuit
Court of Appeals-remember, the kind of appeal that is not allowed under
forced arbitration-so we will soon find out if other judges share Judge
Chen's perspective on what is fair and what is not.
For the record, Uber doesn't stop at imposing forced arbitration on its
drivers. Uber also
refuses to classify its drivers as employees and treats them instead as
independent contractors, who are not entitled to the rights and protections
afforded employees.
We need updated laws to handle these new employment arrangements that are
becoming
more and more frequent in our sharing economy. Until we have such laws,
drivers like Gillette and Mohamed will not only be denied the basic rights
and benefits associated with being classified as employees; they will
continue to be subject to a sham system of justice in which they cannot have
their claims heard in open court with the basic protections afforded by a
court proceeding.
CLARK TAYLOR
Clark Taylor is the Paul H. Tobias Attorney Fellow at The Employee Rights
Advocacy Institute For Law & Policy.
Uber's Attempts To Silence Drivers May Have Backfired | Po
