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Uber and Lyft May Not Compel Arbitration of Claims Brought by State


rss.shrm.org | Joanne Deschenaux

​Takeaway: Uber and Lyft may not compel arbitration of claims brought against them by the state of California and by the State Labor Commissioner because the state and the Labor Commissioner are not parties to the arbitration agreements entered into between Uber and Lyft and their drivers.

​Uber and Lyft may not compel arbitration of claims brought against them in civil enforcement actions by the state of California and by the Labor Commissioner through the Division of Labor Standards Enforcement, a California appeals court recently ruled.

The state and the Labor Commissioner are not parties to the arbitration agreements Uber and Lyft entered into with their drivers. Furthermore, neither the provisions of the Federal Arbitration Act (FAA) nor the doctrine of equitable estoppel supports compelling arbitration in this case, the court said.

In May 2020, the state filed a lawsuit, alleging Uber and Lyft violated California’s Unfair Competition Law (UCL) by misclassifying their California ride-share and delivery drivers as independent contractors rather than employees, thus depriving them of wages and benefits associated with employee status. The state claims that the misclassification harms workers, competitors and the public. The state seeks injunctive relief, civil penalties and restitution under the UCL.

In August 2020, the Labor Commissioner filed separate actions against Uber and Lyft, pursuant to her enforcement authority under the Labor Code. The Labor Commissioner…


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