Employers fight hard to enforce their arbitration provisions, until they realize it’s not really what they want.  Over 5,200 people filed individual arbitrations against Postmates pursuant to their arbitration agreement that Postmates created.  Just to cover the initial filing fees for the cases to begin would cost Postmates over $13 million, so it has now simply refused to pay. However, the court may hold Postmates in contempt for failing to pay its share.

Arbitration can be incredibly expensive to an employer, and while they use it to deter employees from bringing claims against them, they quickly realize how expensive it can be when large groups of workers bring individual claims.  The American Arbitration Association (AAA) charges employers $1,900 for every claim filed, plus a $750 case management fee, just to get the case started.  And that does not include the charges for the arbitrator fees (often hundreds of dollars per hour) that the employer must pay.

The tactic of not paying is now being used by employers to subvert the very process that they demanded when employees try to bring claims against them. To make matters worse, arbitration provision won’t move forward with a case until receive their money.  So what’s the upside of this?  For one, employers might realize it is less expensive to settle than to litigation mass arbitrations (Postmates is currently trying to settle claims).  Additionally, it may force employers to change employment agreements that prohibit class or collective actions into agreements that permit them.

You can read about the Postmates lawsuit here: https://www.reuters.com/article/legal-us-otc-massarb/after-postmates-again-balks-at-arbitration-fees-workers-seek-contempt-order-idUSKBN1Y62E8

Image information:

Attribution: Alpha Stock Images – http://alphastockimages.com/

Original Author: Nick Youngson – link to – http://www.nyphotographic.com/

Original Image: http://www.thebluediamondgallery.com/legal/arbitration.html