DoorDash, a company based in California, was recently mandated to comply with their own arbitration clause. DoorDash hires thousands of delivery workers as independent contractors to deliver food from an array of restaurants, and requires their contractors to sign a mandatory arbitration clause before working. DoorDash was compelled to comply after the company attempted to avoid multiple claims by its independent contractors. Mandatory arbitration clauses have increasingly become controversial due to numerous reports of tech companies utilizing arbitration clauses to silence sexual harassment and discrimination cases. Among other issues, DoorDash’s clause requires that disputes over whether workers are properly classified as contractors or as employees to be handled through arbitration.
Employees, unlike independent contractors, have access to a greater variety of benefits and protections. Over 6,000 DoorDash workers have filed claims that they had been improperly classified as contractors. However, because of DoorDash’s mandatory arbitration clause, the workers were prevented from launching a class-action lawsuit or other court challenges to their classification. Instead, each of the delivery workers contesting their status had to pay the $300 filing fee to seek an individual arbitration. Ironically, DoorDash failed to meet deadlines or pay its own required $1,900 fee for each arbitration case that were set forth by their own clause.
The company sought to put a hold on the arbitration cases, because a separate California court case regarding a dispute between DoorDash and delivery drivers over employee-contractor classification had reached a $39.5 million settlement. In that case, DoorDash sought to dismiss the claim based on the arbitration clause. However, in the federal arbitration case, DoorDash sought to refer back to the class action to stop the process. The judge rejected these arguments as unacceptable “hypocrisy.”
As many companies enter the “gig economy” space, there are a number of concerns to keep in mind, including the use of contractor status and arbitration clauses. A business law attorney may help companies to address contract disputes and manage potential litigation.