For many drivers and delivery couriers, suing a company like DoorDash or Uber is unfathomable due to cost – and arbitration agreements. Several thousand DoorDash drivers wouldn’t stand for it anymore, however, and sued DoorDash. Senior RSG contributor Jay Cradeur shares how this DoorDash arbitration lawsuit is proceeding – and how it could change everything.
The judge has had enough, and he’s told DoorDash to ‘deal with it.’ You can’t have it both ways!
Companies like DoorDash, Uber and Lyft force you and me to sign an arbitration agreement in order to work for the company as an Independent Contractor (IC).
This agreement prevents us from coming together and combining our claims in a class action. We each have to go to arbitration individually.
The rationale behind this clause is that the cost to pursue arbitration is usually more than the potential award, so most drivers will not pursue arbitration. If they were able to join together, perhaps that would make it more financially viable. With individual arbitration, that’s usually not an option.
In this article, I will share how DoorDash argued that the arbitration clause was not fair for DoorDash, how the judge in the case ruled, and what it means for gig economy drivers.
As with so many stories in the rideshare and delivery space, this one starts with AB5. Assembly Bill 5, which went into law on January 1, 2020, forces all California companies to pass a three-question test in order to classify someone as an independent contractor. The questions are:
Most agree that companies like Uber, Lyft and DoorDash do not pass this test. Therefore, there are many “independent contractors” out there who are taking legal action to get back pay, overtime pay, holiday pay, sick pay, and expense reimbursement.
Once AB5 went into effect, over 5,000 DoorDash drivers all filed individual arbitration cases. That turned out to be quite a nightmare for DoorDash, as the law firm they hired to handle the arbitration cases served up a bill for $12,000,000 to move forward.
DoorDash Cries Foul
What did DoorDash do? They pleaded their case to a judge.
DoorDash said the cost for arbitration was too high, and they should not have to pay the freight. Instead, they requested more of a class-wide lawsuit.
Imagine that. DoorDash demands that all “independent contractors” sign an arbitration agreement. Then when too many drivers actually adhere to DoorDash’s own policy, DoorDash tries to get out of honoring their that clause.
The Judge Says NO!
Judge William Alsup heard both sides of the argument and ruled decisively against DoorDash.
Judge Alsup is *done* with companies that impose individual arbitration clauses and then resist arbitration pic.twitter.com/GABjRhbPhP
— Charlotte Garden (@CharlotteGarden) February 11, 2020
You can read the judge’s full decision here.
You have to appreciate a judge who is not swayed in the least by DoorDash’s tactics. As he wrote:
“Instead, in irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate. This hypocrisy will not be blessed, at least by this order.”
The Arbitration Timeline
Now that DoorDash can not avoid individual arbitration, each of those 5,000 cases will proceed.
The first of those cases will set a precedent. If the awards provided to drivers are significant, you can expect more drivers will pursue arbitration. Time will tell.
Arbitration is also how many Uber and Lyft drivers are working to get back pay for the past four years of work. Mark Potter of Potter Handy LLP in San Diego, California is currently representing hundreds of rideshare and delivery drivers. Mr. Potter shared with me:
“Companies like Uber, Lyft and DoorDash pay their drivers less than ½ of what they are required by law to pay. The companies get away with illegally underpaying their drivers because arbitration clauses require each driver to pursue their claims individually in private arbitration and few attorneys are willing to engage in this level of hand to hand combat.
Each driver needs to engage an attorney of his or her own in order to force these companies to pay what you are owed.”
If you have been an active driver over the past four years in California, then you can visit Mark’s damage calculator and check out how much here.
I did, and now I am now in active arbitration with both Uber and Lyft. According to their calculator, I’m owed $600,000 by Uber and Lyft – yes, you read that right! I suspect it will be less but obviously that’s a lot of money to leave on the table.
We are a land of laws. Sometimes it seems that the big corporations always win, and the little guy, the lone driver, gets screwed.
Here is a case in which a judge stood up for the working man and forced DoorDash to honor its independent contractor arbitration agreement. We don’t know how the arbitration will work out, but we know at least 5,000 drivers will have a legitimate chance to argue their case and earn some back pay, which according to AB5, we are now entitled to.
Be safe out there.
Drivers, are you participating in the DoorDash lawsuit? Would you if you had the opportunity?
-Jay @ RSG
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