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Gig economy companies made workers arbitrate disputes. Then didn’t pay fees to start cases.

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In his San Francisco courtroom, U.S. District Judge William Alsup has berated lawyers for Google, Oracle, Uber and PG&E. Last week, an attorney for DoorDash found himself the target. The issue was the way the meal-delivery startup pushed its couriers into arbitration.

“Your law firm and defense law firms have tried for 30 years to keep plaintiffs out of court in employment cases. You’ve gotten a lot of success in the courts,” Alsup said. “So finally somebody says, ‘OK, we’ll take you to arbitration,’ and suddenly it’s not in your interest anymore, and now you’re wiggling around trying to figure some way to worm out of your own agreement.”

Arbitration is a long-standing way of taking disputes out of the court system and resolving them, theoretically, more quickly and at lower cost. DoorDash was back in court because it was taking a truly low-cost approach: It hadn’t paid the arbitration fees for the cases in question.

Contracts that impose arbitration are commonplace in the gig economy, with drivers, meal couriers and other workers waiving their right to a trial with a few taps of an app. Uber, Lyft and Postmates, along with DoorDash, are among the companies whose contracts require arbitration.

Arbitration is favored by many businesses because it keeps resolutions quiet and avoids the potential for sympathetic juries to award big damages. But thousands of workers have filed arbitration demands and companies haven’t coughed up millions of dollars in fees to pay for the process, landing them in courtrooms like Alsup’s anyway.

Tens of thousands of Uber and Lyft drivers sued the companies for not paying arbitration fees to address their claims. A federal judge in Oakland compelled Postmates into individual arbitration with more than 5,000 couriers in October. And when a San Francisco Superior Court judge ordered DoorDash to arbitrate individual claims for 419,409 workers, the company instead negotiated a $39.5 million settlement, according to a November court filing.

“DoorDash only works if it works for all members of our community; Dashers, merchants and customers,” spokeswoman Becky Sosnov said in an email, using the company’s term for couriers. “Like many other companies, DoorDash includes an arbitration provision in its independent contractor agreement.” Workers have the ability to opt out of arbitration, she noted, and the company “has arbitrated claims with Dashers historically and currently is doing so while ensuring that claimants meet minimum filing requirements of arbitration demands.”

Postmates and Lyft did not respond to requests for comment. Uber declined to comment.

Failure to pay arbitration fees is not unique to tech companies. The Legislature passed a law this year penalizing California employers who don’t pay fees within 30 days. Attorney General Xavier Becerra recently opened an investigation into the issue. Company attorneys have argued in court that arbitration claims weren’t filed correctly or violate contracts.

Businesses have traditionally turned to arbitration to resolve disputes by avoiding litigation.

“We say let’s see if we can resolve this, without having months of litigation where positions get hardened and feelings get hurt,” said Michele Miller, the head of Cozen O’Connor’s West Coast labor practice.

Miller, who represents management in arbitrations, also said court cases raise concerns about “allegations that may ultimately prove to have no value being aired in public forums beforehand.”

But what mandatory arbitration clauses don’t count on are mass claims, said Shannon Liss-Riordan, a Boston attorney who has challenged gig economy companies in court for years.

“What all the companies are banking on is that few people will go through the trouble and expense and time of bringing an arbitration,” Liss-Riordan said. “What they weren’t counting on was people taking them up on it and filing masses of arbitration against companies.”

To pressure companies, plaintiffs’ attorneys “call them on their bluff,” said Veena Dubal, associate professor of law at UC Hastings. They do that by filing thousands of individual arbitration claims.

“It’s extremely expensive for companies to arbitrate individually, more expensive than to do a class action, and it’s time consuming,” Dubal said. But companies favor that approach because it means no legal precedent is set.

One key issue has been whether gig workers should be classified as independent contractors or employees. The legal landscape will shift in January, when a new law, AB5, takes effect, making it harder for companies to claim workers should be contractors.

In the meantime, disputes over contractor status under the old rules fester on — and unpaid arbitration fees are a factor. The case Alsup heard Monday alleges that DoorDash hasn’t paid filing fees to the American Arbitration Association to address 2,236 workers’ petitions. The lawsuit said workers paid the $1.2 million required under association rules, but DoorDash didn’t pay more than $4 million that it owed after requesting an extension. The association closed the cases, stalling resolution.

In a letter to the workers’ attorneys and the association, DoorDash said paying for “deficient arbitration demands constitutes an excessive and unreasonable hardship.” DoorDash attorney James Fogelman argued in court Monday that arbitration claims weren’t correctly submitted because they didn’t contain a copy of each individual contract.

Warren Postman, an attorney for the workers, said they don’t have individual documents because the workers see the terms only when they scroll through them on an app. Alsup said he symphathized.

“It’s unconscionable that you would have a system that no one could tell whether they have an agreement,” the judge told Fogelman.

“If they don’t click on that, then they don’t get a job for that day. People out there who are desperate, living paycheck to paycheck, and they say, ‘What the hell, I’ve got no choice, I’d better click on this,’” Alsup said.

The arbitration association declined to comment on the specific case per its policy. “If a party refuses to pay its fees to the association, the other parties involved may seek court intervention,” spokesman Michael Clark said in an email.

Two new California laws going into effect in January tackle mandatory arbitration. Companies can no longer require employees to sign an agreement forcing harassment, discrimination and wage claims into arbitration as a condition of employment instead of being able to sue. Companies will also be penalized for not paying arbitration fees within 30 days.

California’s law banning mandatory arbitration as a condition of employment was carefully written to not contradict the Federal Arbitration Act and Supreme Court case law that allows employers to mandate arbitration and prohibit class-action lawsuits. But some attorneys say legal challenges are inevitable and the arguments won’t stand up in court.

Even if California’s law survives, it doesn’t change anything for workers who already signed a contract requiring arbitration. And DoorDash, Uber and Lyft have pledged to fight AB5, pledging $30 million apiece toward a ballot initiative to overturn the law.

In the meantime, gig workers will keep filing claims. And the arbitration fees will keep piling up.

Mallory Moench is a San Francisco Chronicle staff writer. Email: mallory.moench@sfchronicle.com Twitter: @mallorymoench



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Embr adds food delivery side gig in Early Access update

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Simulator games are all the rage nowadays. All sorts of occupations have been given the treatment to varying degrees of success, but a red hot one about firefighting might just be on the horizon. Having arrived on both Steam and Google Stadia in Early Access last month, Embr will now see its first major update. Available now, Curve Digital and Muse Games have brought even more frantic action to the multiplayer affair.

Juggling gigs

The Embr Eats update will add a brand new mode to the game. Now, you can supplement your firefighting income with some action as a food delivery service employee.

“Everybody who has played the game so far knows that Embr‘s frenzied take on firefighting is a satirical way of taking a look at the gig economy,” said Howard Tsao, team lead at Muse Games.

“The new update takes that even further, with the Embr Eats feature throwing take-out delivery into the mix for good measure. Delivering food is a way for players to top up their earnings and we also think it adds a new take on the world of Embr. This is just the first of our ideas, too – we have more where this came from. We’re very much a ‘live project’ with the game in Early Access, and so improving the game – both with bug fixes and new play modes like this – is a huge priority.”

Embr Adds Food Delivery Side Gig In Early Access Update (2)

More goodies

A new level will also come alongside this new update. Empire Towers will allow firefighters to battle the flames in a densely packed high-rise, so get ready for heights and heat. Next, a new offhand tool, the Stim Pen, will allow you to regain health in an instant. And those wanting to look good while doing their job can look to the Curve Crossover Fashion Pack. It includes items such as:

  • Bomber Crew Outfit – Hat & Jacket
  • Hot Shot Outfit – Hat & Jacket
  • American Fugitive Outfit – Shirt & Pants
  • Stealth Inc Outfit: Goggles, Shirt, Gloves, & Pants
  • Early Access and Convention exclusive item: The FAX Hat

Embr is available on Early Access for Steam and Google Stadia.

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Labor Groups, San Francisco Push Bogus Taxpayer-Funded Survey to Support Anti-Gig Law

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A liberal advocacy group’s own researchers raised red flags about a taxpayer-funded study used to justify a union campaign against the California gig economy.

The San Francisco Local Agency Formation Commission helped fund a survey conducted by Jobs with Justice, a left-wing advocacy group largely funded by labor powerhouse Service Employees International Union (SEIU). The survey reported that 71 percent of gig workers in the San Francisco area work more than 30 hours a week and receive “poverty level” wages. According to the group’s website, Jobs with Justice planned to use the survey to “make policy recommendations and support organizing” among gig workers. The survey’s summary page emphasizes the need to enforce anti-gig labor laws.

Left-wing labor group Gig Workers Rising has used the survey to rally in support of California Assembly Bill 5, a controversial law limiting companies’ ability to classify workers as independent contractors. The group called the study “the most comprehensive survey of actual work done” in the gig economy. Internal communications obtained by the Washington Free Beacon, however, reveal that the survey was pitched to potential financial backers as “not representative,” and an academic researcher involved in the study voiced concerns regarding Jobs with Justice’s recruitment tactics.

While the study initially called for 1,200 survey respondents, Jobs with Justice narrowed the scope following the spread of coronavirus, pivoting to an online survey focusing on the pandemic that aimed to reach just 500 respondents.

“The goal behind an online survey of 500 workers, while not representative, would be to turn around data quickly … in order to inform current policy discussions,” an internal description of the updated survey obtained by the Free Beacon said. It went on to reach just 219 respondents.

Pacific Research Institute senior fellow Wayne Winegarden criticized the study’s methodology, calling the survey’s results “meaningless.”

“The survey is not representative of the intended population with the original goal of 500 responses,” Winegarden told the Free Beacon. “The study did not reach this amount, having only 219 responses. So, in no uncertain terms do these results represent the view of gig workers.”

The study also downplayed Jobs with Justice’s involvement in an attempt to bolster its academic appeal. While the published survey lists UC Santa Cruz professor Chris Benner as the project’s lead, Jobs with Justice executive director Kung Feng is described as “leading” the project in internal emails obtained by the Free Beacon. The emails also show that the online survey was written by the group’s research director, Erin Johansson. Benner merely “edited the wording in a few questions,” according to the internal communications.

Benner, who did not return request for comment, also raised concerns regarding Jobs with Justice’s incentive plan to provide a gift card to all survey respondents.

“One, I’m not sure where the budget for that comes from, and two, with an online survey, it leaves open lots of opportunities for people to game it,” Benner wrote in a March 17 email to Johansson.

Following the academic’s objection, Gig Workers Rising continued to advertise the survey in an April tweet by saying respondents would “get a $10 gift card.” A Jobs with Justice invoice for the study listed $45,181 in “survey costs,” including “incentives and app payments.” While the published study lists the gig economy companies each of the survey’s 219 respondents work for, internal data obtained by the Free Beacon shows that 91 of the respondents did not report their company, suggesting some may have been non-gig workers who completed the survey for the incentive.

The invoice was sent to San Francisco Local Agency Formation Commission executive officer Bryan Goebel, who solicited funding for the study on Jobs with Justice’s behalf, internal emails show. Reached for comment, Goebel said the coronavirus-related study “was never intended to be” representative and that $50,000 in taxpayer funds were used only for the “initial pilot survey” launched prior to coronavirus. The final study combined the results of both the pilot survey and coronavirus-related survey, a methodological red flag, according to Winegarden.

“In the midst of the survey being in the field, they stopped the survey, reworked it to account for the coronavirus, and then continued with the survey,” Winegarden told the Free Beacon. “These results from before and after cannot be compared to one another.”

Goebel also told the Free Beacon that Benner “was indeed the overall lead” on the study, adding that Jobs with Justice simply “led the outreach.” He did not address the fact that the coronavirus-related survey was drafted by Jobs with Justice.

Charlyce Bozzello, a spokeswoman for labor watchdog the Center for Union Facts, said activist front groups often misuse research to advance their ideological goals.

“For years, unions have used flawed ‘research’ to support their organizing campaigns, so it’s no surprise to see Jobs with Justice involved in this project,” she told the Free Beacon. “What is surprising is that the city of San Francisco and UC Santa Cruz would lend their names to this charade.”

Other gig economy studies dispute Jobs with Justice’s findings. A Cornell University study published Monday found that 96 percent of Uber and Lyft drivers in Seattle drove less than 40 hours a week. It further found that 92 percent made more than Seattle’s minimum wage of $16.39, with the media driver earning $23.25 per hour after deducting expenses.

Jobs with Justice and Gig Workers Rising did not respond to requests for comment.

Collin AndersonCollin Anderson is a staff writer for the Washington Free Beacon. He graduated from the University of Missouri, where he studied politics. He is originally from St. Louis and now lives in Arlington, VA. His email address is anderson@freebeacon.com.



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Why the Uber driver case has the potential to alter Canada’s gig economy forever

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Article content continued

Heller was a driver for UberEats who argued that he was an employee, not an independent contractor. That meant Uber owed him overtime, vacation, holiday pay, as well as other entitlements.

The Supreme Court didn’t answer the question of whether Heller and other Uber drivers were employees or not, so in that respect the real issue lies ahead. But it did remove an important roadblock, paving the way for a potentially $400 million lawsuit.

Tucked away in the contractor agreement that every Uber driver must sign before they can start working is an arbitration clause.

The clause required drivers to bring any problems to arbitration in Amsterdam, the Netherlands, and not to an Ontario court. The arbitration in Amsterdam would cost around $14,000 in administrative fees up front, as well as the cost of transport and legal representation in the Netherlands. Something no Uber driver could even possibly afford. Take Heller himself, who earns around $400 to $600 a week for 40 or more hours of work.

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