As we wrote here recently, two federal courts in California rejected Postmates’ attempt to escape having to defend thousands of individual arbitrations filed by drivers contending they have been misclassified as independent contractors. Those decisions require Postmates to pay millions in arbitration fees alone.
A federal court in Illinois has now reached the same conclusion, holding that Postmates must proceed with more than 200 individual arbitrations that will cost Postmates $11 million in arbitration fees.
Arbitration agreements with class action waivers have become more prevalent than ever following the United States Supreme Court’s Epic Systems decision. And they are especially prevalent with gig economy employers.
As we have written before, companies that implement arbitration agreements with class action waivers must be careful what they ask for. By using such agreements, they run the risk of dozens, hundreds or even thousands of individual arbitrations, the cost of which could threaten the companies’ very existence. (In California, we estimate that the arbitration costs alone for a single-plaintiff case are approximately $60,000 – which does not include the attorney’s fees in defending that case or the potential exposure.) It is for that very reason that some companies have elected not to implement such agreements.
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