Misclassification in the Sharing Economy: It's the Arbitration Agreements
50 Pages Posted: 31 Jul 2017
Date Written: July 14, 2017
This study examines whether companies in the sharing economy altered their contract terms following two landmark Supreme Court decisions affirming the enforceability of class action waivers in arbitration agreements: AT&T Mobility, LLC v. Concepcion and American Express v. Italian Colors Restaurant. Many of the companies in the study appear to have been influenced by the decisions.
The study analyzes Terms of Service contracts from 38 sharing companies between 2009 to 2016. Prior to 2012, only about one third of companies used arbitration agreements, and few such agreements contained a class action waiver. By 2016, however, nearly two thirds of sharing companies included an arbitration agreement, and almost all included a class action waiver. These class action waivers remove the future threat of aggregate liability for misclassification of independent contractors. The addition of such waivers could explain in part why sharing companies have not reclassified their workers, even after experiencing substantial litigation.
Keywords: Arbitration, Class Action, Collective Action, Wage and Hour, FLSA, Class Action Waiver, Sharing Economy, Gig Economy
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