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San Francisco Grocery Couriers Headed to Arbitration

Saturday, November, 21, 2015

A federal judge recently ruled that several grocery delivery drivers in San Francisco who claim they were wrongly classified as independent contractors and denied benefits will need to settle the matter through arbitration.


The plaintiffs sued the grocery store delivery services MapleBear Inc., or Instacart in January and the class action was moved to federal court in February. In July, the US Department of Labor issued a memo alerting people to the fact that many employers are misclassifying employees as independent contractors, either by mistake or intentionally to avoid paying benefits afforded to full-time employees.


The Labor Department uses a multi-factor test to determine if a worker should be considered contractual or an employee, mainly focused on whether or not the worker is economically dependent on the business for which they are working.


Instacart dispatches workers to shop for, purchase, and deliver groceries to customers ordering through a mobile phone app. Workers were required to sign agreements with arbitration clauses, stipulating all disputes must be settled through arbitration instead of the court system, and also requiring them to cover half the cost of arbitration and all of the company’s legal fees if the worker loses his or her claim.


The federal judge voided the fee sharing and shifting, but did believe the agreement compelled arbitration. He also excluded the worker’s claims for civil penalties under California’s Private Attorney Generals Act could not be arbitrated and excluded them from the arbitration. The ruling continues the ongoing debate over whether contracts can compel arbitration and under what circumstances it will be considered appropriate and upheld in court.