Having Your Arbitration Clause and Waiving It, Too

Employers in service industries might reconsider class action waivers in arbitration agreements, or consider tailoring such agreements with employees or independent contractors to avoid paying costly arbitration fees, in light of the federal court decision in Abernathy et al. v. DoorDash. While employers have generally had success in limiting legal options for consumers and employees, according to ABA Section of Litigation leaders, the plaintiffs in arbitration may have found another way to make dispute resolution of class claims an expensive proposition for employers.

Contractual Terms Matter

In Abernathy, the plaintiffs were 5,879 employees or independent contractors who worked as couriers for the defendant, DoorDash, Inc., a food delivery services company. To make deliveries for the defendant, the plaintiffs had to click through an online agreement that contained a “Mutual Arbitration Provision,” which applied to “all disputes arising out of or relating to this Agreement, [including] a contractor’s classification as an independent contractor.” The parties who executed the agreement further agreed that “by entering into this agreement to arbitrate, both waive their right to have any dispute or claim brought … or participate in … a class action[,] collective action and/or representative action.”