Employers considering requiring their employees sign arbitration agreements with class waivers just got a real-world example of the effectiveness of such agreements. On September 25, 2018, the U.S. Court of Appeals for the Ninth Circuit upheld the enforceability of arbitration agreements signed by thousands of Uber drivers in California. In the underlying lawsuits, the Uber drivers allege they were misclassified as independent contractors instead of employees, were not given the entire amount of their riders’ tips, and were not properly reimbursed for their business expenses. Uber sought to compel the drivers to arbitrate their claims pursuant to arbitration agreements they had signed with Uber.
The drivers attempted to avoid arbitration by arguing that the class waivers included in Uber’s arbitration agreement violated the National Labor Relations Act. In applying the Supreme Court’s recent decision in Epic Systems Corp. v. Lewis, which found arbitration agreements with class waivers enforceable in the employment context, the Ninth Circuit rejected the Uber drivers’ argument.
The Ninth Circuit also separately considered the drivers’ argument that the lead plaintiffs in one of the underlying lawsuits constructively opted out of Uber’s arbitration agreements on behalf of the entire class of plaintiffs. The Ninth Circuit also rejected this argument, finding that lead plaintiffs do not have the authority to make an election for others regarding arbitration agreements.
The Ninth Circuit’s ruling is the latest in a nationwide trend of enforcing arbitration agreements with class waivers in the employment context and will likely require many of the Uber drivers to proceed in individual arbitrations, instead of pursuing their claims as part of a class. The decision illustrates the effectiveness of arbitration agreements with class waivers in preventing employees from bringing legal claims against their employer in court and on a class basis. Employers considering implementing such agreements should consult with counsel to carefully analyze whether arbitration agreements with class waivers are appropriate for their workforce.