Have any small business owners, contractors, freelancers, etc. had success pushing back against arbitration clauses during contract negotiations?
I've spent money on lawyers' fees in order to make changes to offered contracts in the past, only to have them rejected outright. (It makes a certain amount of sense, as $CORP isn't going to have their legal team spend hours negotiating/revising a contract with a vendor that's only worth $NNk.) Unsurprisingly, this is not an area I and, I would imagine, others like me have a lot of room to experiment in: 1) lawyers are expensive and 2) missing out on that contract might mean missing out on $BILL payment. However, _most_ contracts I'm given these days contain an arbitration clause. Having had to sue someone in small claims court (I was successful!), I _loathe_ the idea of being forced into a kangaroo court.
Anyways, I'm not looking for free legal advice, I'm just curious to know how others are navigating this issue.
Arbitration clauses are usually in everyone's favor because it dramatically reduces the cost of dispute resolution. The only downside is they prevent class action suites. In a b2b contract that usually isn't a consideration and so arbitration is a benefit - it would be foolish to try and remove it.
Arbitration clauses are explicitly not in everyone's favor and that is the sort of incorrect information companies like to spread around. Frequently the company is the one picking the arbitrator, which I hope has obvious problems with them being unbiased.
Even in cases where the arbitrator is a "neutral" party that both sides have to agree to, the companies are the ones bringing in the lion's share of work to the arbitrators and they are not going to agree to an arbitrator who rules against them in any significant quantities
This presumes the company is frequently in arbitration. That is not frequently the case. With few exceptions, most companies want to (and do) avoid these kinds of disputes. My critique of arbitration is that, under AAA rules, it's not actually much cheaper than just going to court. The only real advantage is that it cuts off appeals, but that cuts both ways. These days I find clients are relatively ambivalent about whether to include arbitration in B2B contracts.
The company is going to be frequently in arbitration compared to the employees because they have an agreement with every employee and the employees only have an agreement with the company.
Even in your statement here, there's evidence that the arbitration agreements are only in place because the companies can force it. B2B contracts usually have _actual_ negotiation involved instead of a take it or leave type of deal. Now that they can't force the agreements they are ambivalent about whether they are included.
If the arbitration agreements don't survive in contacts when both parties are on roughly equal footing and only show up when one party is much weaker, doesn't that imply that they are abusive?
You know what the lowest cost of resolving a dispute is: zero. When someone files a class action that causes a business to stop some illegal behavior, I get protected and it costs me nothing. I may even receive a small check. Nobody benefits from a zero accountability environment long-term.
I wonder at what point arbitration is not really an "option". I looked around, the only ISPs in my area all include arbitration clauses. Is it really a choice when the choice is no home internet, or arbitration that eliminates my access to the courts?
Same for the last two normal jobs I've taken. I was surprised to also be presented with an arbitration agreement when visiting a new doctor for the first time. I think it's become quite standard since no one is really able to stand up against them.
Is there a practical distinction between agreeing to arbitration and agreeing in advance to lose? Compared to court cases, how many arbitration cases are actually decided in favor of the petitioner?
Cant say the quality of this study, but it came up in recent discussions about the topic when the US supreme court ruled on a related matter, and claims "employees win 21 percent of arbitration cases, compared to 57 percent of cases in state court. " and "Workers also get less money when they're successful: $109,000 in arbitration compared to $575,000 in state court" (quotes pulled from a digg summary)
This definitely sounds like a correlation and not causation sort of thing. Court cases are much more expensive for the plaintiffs too, so they aren't going to take it to court unless if they're reasonably sure they can win and the expected payoff makes it worth it.
It's not in the company's interest to contract an arbiter that doesn't typically rule in their favor. Customers/workers don't choose the arbiter, the company does. This is a conflict of interest and absolutely is a "causation" thing. Small claims court cases are pretty cheap.
Arbiter bias is one of the very few areas in which you can sue to throw out an arbitration award. The entire legality of forced arbitration is predicated on the arbiter being unbiased.
The company absolutely has an interest in not choosing the arbiter, instead contracting out that choice to some respected third party. Corporations win more frequently in arbitration because you are required to do work, you are required to be prepared, you don't have unlimited resources at your disposal, and you don't get to go on a fishing expedition in the form of lawsuit discovery.
>Corporations win more frequently in arbitration because you are required to do work, you are required to be prepared, you don't have unlimited resources at your disposal, and you don't get to go on a fishing expedition in the form of lawsuit discovery.
Every single point there is something that a party can win at if they have more money than the opposing party and companies always have more money. It's not like it's the poor, abused corporations who have to shoulder the massive legal cost against a random employee who can employ relatively limitless legal assets. You are flipping the narrative on documented reality.
Adding on to that, there is no way for there not to be bias I. The arbitrators. They are a business and the companies that have blanket arbitration agreements are going to be bringing orders of magnitude more cases to them than any employee.
That leaves you with one of three options. First is that the arbitrators decide in the companies favor more often, second is thatthey decides it as equally as the courts, and third is that they decide in the employees case more often. If it's the third case, why not just immediately settle with all employees instead of spending the time and money to set up a separate system to resolve disputes outside of the court? If it's the second case, why spend the time and money to set up a second system outside the courts to get a result that is the same as the courts? You can claim that it lowers costs, but companies are the ones that are increasing costs to ensure that they win. That leaves us with only the first case, where companies win more often, which is a complete lack of justice. Companies have moved past using their power imbalance to overwhelm employees in the court system, to just removing the employees ability to use the courts at all.
> "Workers also get less money when they're successful: $109,000 in arbitration compared to $575,000 in state court" (quotes pulled from a digg summary)
There is definitely a difference, but that has to be adjusted for the difference in expenses as well. For an employee who is successful, arbitration is also a lot cheaper than a court case.
FWIW, the article also claimed that workers tried to resolve differences using arbitrations less often. Assuming that's true, hard to prove the direction of causation, but it's another point to consider.
No. As they are secret courts, fundamentally biased against the human when against a corporation by virtue of money, and not required to follow the law, they indistinguishable from an agreement to lose.
>Consumers obtain relief regarding their claims in only 9 percent of disputes. On the other hand, when companies make claims or counterclaims, arbitrators grant them relief 93 percent of the time—meaning they order the consumer to pay. If you consider both sides of this equation, in arbitration, the average consumer is ordered to pay $7,725 to the bank or lender.
Note that it's limited to arbitration involving financial companies though. Absolutely terrible to see what happens to normal people when companies can privatize justice.
Of course, that prompts the question about how many of the customer complaints were legitimate, and how many of the company complaints were legitimate.
I had dealings with a national technology-based company over the past several years that involved fraud. Not on my part. It was obvious to me after some investigation that they had stolen several hundred dollars from me by causing charges on another account without asking my permission or clearly indicating that charges were being made. (I had to investigate to figure it out)
I was willing to let it slide and move on. Lesson learned. Then I saw a commercial for the company and realized: they were doing the same thing to tens, maybe hundreds of thousands of other customers.
It was really kind of mind-boggling when I thought about it. Who knows how much money was involved.
So I looked up a lawyer in a nearby large town who had experience and knowledge about class action suits in the technology arena.
We had a nice chat. I had accumulated a ton of paperwork to show what was going on.
He agreed. They were hurting a lot of people. On purpose. But he couldn't take the case.
Was it lack of proof? Broken laws? What?
It was arbitration. If I understood him correctly, arbitration clauses are destroying class action lawsuits. So you can legally screw over tons of people, then insist arbitration with the few that care if you get caught. And you get screwed over? You'd better not say anything about it because then you'd be slandering the company. After all, they haven't been found guilty of anything, right?
So how about regulatory agencies, I asked? Surely this violates some regulation that they operate under.
His view, if I understood him correctly, was that regulation was entirely political. It had nothing to do with them breaking any rules. It certain political contexts certain companies got the hammer. In certain other political contexts, they did not. In this particular case, he knew from the lay of the land that it was not worth pursuing.
I'm still taken back by our conversation. I had no idea that arbitration had effectively destroyed class action. I don't remember this ever being reported anywhere.
If this story was true, the attorney should have told you that you could report it to your state's attorney general, which would have resulted in civil and criminal lawsuits filed against the company by the state (which is not a party to the contract and not bound by the arbitration clause). And the settlements for these kinds of cases always involves refunding the customers.
Again, if the story was true, there were ways to hold the company to the rules, get your money back, and avoid any legal costs of your own.
IANAL. If you are, why don't we set up a call. I'll explain it to you and you can tell me where I'm wrong. Then I won't tell a misleading story like this again.
I can only relate to you what I heard. I viewed what happened as criminal. The company would have viewed it as covered under our contract. Nothing to see here, folks! I'm guessing the AG wouldn't take up a complex legal criminal case involving tech if it looked like there was a good chance it could end up a civil matter. And so we're still in civil court.
I tried proposing several different remedies during our talk. What if I sued by myself? It might work. I might get part of the monies back. Or not. In either case it'd take a while.
What if I went to the press? If there's no proof of anything, and I don't have a lawyer, I could be getting into risky legal territory. It went on like this for a few minutes. Admittedly, not being an attorney, I probably forgot to mention a lot of things.
I can assure you this happened. And I'm happy to explain it to anybody that would like to hear it off-the-record. It's a fucked-up situation and I would love more than anything else for there to be some remedy like you're describing.
It's just not worth my time, or the time of the attorney I consulted, to chase down a remedy that's only going to be a few thousand bucks. Situations like this are why you have class action suits in the first place. Hell, I'll give you the name of the attorney and you can call and ask him.
I am a lawyer but I charge $600/hour for my services. I do not offer free consults or legal advice. (What I've offered so far, including this post, doesn't constitute legal advice, which is the application of law to the specific facts of a particular case. Speaking in generalities doesn't result in a professional relationship. )
If you would prefer to call them directly it's best to call your local CA office (numbers available on their website) and they'll connect you to the appropriate person. (I recommend this as they respond to you immediately; the form can take several weeks.)
I'm guessing the AG wouldn't take up a complex legal criminal case involving tech if it looked like there was a good chance it could end up a civil matter. And so we're still in civil court.
I'm not sure why you think this. What you described sounds like fraud, which is pretty simple from a legal perspective to investigate and prosecute at the scale you described. And the State AG would never turn down a criminal case just because they could also go after them civilly, as the criminal case strengthens their hand in the civil case.
I have dropped this issue as it is not worth my time. I'm simply relaying what another $600/hour professional told me as best as I can.
I apologize if I misrepresented any part of what that guy said. Since both you and the attorney I contacted seem to enjoy this legal stuff, if you have any confusion over what I've related, you two are welcome to chat. I'm happy to hook you up. Coming online and casting doubt on whether my story is true or not doesn't seem to be a very good use of either of our time either, and this is the reason I replied to you in the first place, not for some free legal consultation, online or otherwise. I'm happy to adjust my story if there's any part any HN commenter found that was in error. I've done the best I can to relate it.
As far as what I would think and why, I was just guessing. What I think is fraud or a civil matter or the prosecutorial leanings of my state AG? That and ten bucks will get you a nice cup of coffee. This kind of thing was the entire reason I spent an entire morning talking to the other bozo.
I'm not a California resident.
I appreciate your taking the time to reply here. I'm not sure either of us educated any of the other readers. My entire point was to offer to correct any errors in my story. I apologize to the rest of the forum that this line of discussion ended up rather pointless. My offer still stands. I have no desire to relate stories that are untrue, online or otherwise. If anybody has any questions, I am happy to do what I can to clear them up.
I literally don't understand how if a person takes $100 out of my wallet I can report them for criminal theft, but if that same person does it as part of a business, that's somehow a civil issue.
In a civil issue they either have it given by you, or they hold back when giving you something, but they don't take from you - or they have your written general permission to take. It's criminal exactly when there is no other law code allowing it. Very simple. Very wrong but based on good faith.
When my (now ex-) wife was going to law school, one of the biggest surprises I had was learning how often contracts aren't entirely binding (as long as you have the money to actually go to court with real representation).
It's easy to think "You agreed, it's clear that you agreed, end of story" but that's not the way contract law actually works. If the parties aren't both getting a roughly equal deal and operating with roughly equal levels of good faith, everything changes.
And overall, that's a good thing. "If you don't like it, do something else" isn't much of an option when there's no other "real" option. "Go found your own company that works differently" is a farce for the vast majority of the population.
> (as long as you have the money to actually go to court with real representation)
The theoretical ability to contest contract provisions is close to meaningless because the cost of litigation makes it inaccessible for the vast majority of the American people. Arbitration puts justice even further out of reach.
No argument here (though I have no real solution to that problem. Denying everyone lawyers doesn't help, it just slightly shifts who suffers).
My point was that on this and related topics the "It's a contract, suck it up" type responses are based on a flawed basis, not that the result is actually just or fair.
That's only true for contracts between businesses and consumers, or generally contracts not involving any businesses.
In a B2B contract like between Uber and its drivers, the contract is whatever the parties agree to (as long as there aren't any unlawful provisions), even if there does not appear to be a roughly equal deal.
There's no real option to working as an Uber driver?
Edit: I'm sorry, the parent comment was predicted on applying "there is no alternative" to the situation "whether you contract for Uber". That doesn't make sense, and I'd appreciate an answer besides a downvote. It seems like a fair question.
If you don't like the Uber terms but are trying to make money driving people, you have severely limited options as to your alternatives to drive for, and I'd not be surprised if they all had arbitration clauses as well. saying "If you don't like the terms, go somewhere else" is likely an illusion of choice and not a practical option.
And the legal definition of "no choice" means "no choice if you want to make money driving other people in a manner where you set your own hours"? Because you have lots of other options both for employment, and for driving other people (bus driver, shuttle driver, limousine driver...), and for driving (package delivery, truck driver).
I just don't get the intuition for how a (relatively) new market entrant in a relatively new market can, in any meaningful sense, be such a vital option that the other side is powerless.
This argument is silly and ignores the power imbalance between employer and employee.
We would be better of saying no company can offer employment on $obviously_bad_for_employee terms than letting the 'market' decide. Every employer benefits from this arrangement and no employer would have it in their contract if it didn't benefit them.
The power to just change jobs isn't as common and people on HN believe and that power is meaningless when most employers require arbitration. And why wouldn't they, it directly affects their bottom line.
>We would be better of saying no company can offer employment on $obviously_bad_for_employee terms than letting the 'market' decide.
Hold on -- are you saying that nothing about employment contracts should be up to the market? What are you counting as obviously bad here? Different people would say that e.g. under $wage/hr is obviously bad, but then you're right back to price controls.
What are you criteria for when something should be up to the market?
Between entities of similar power, contracts contain terms to protect both parties. When one entity has more power than the other, the terms are used to further empower them at the cost of the other.
Who are you to decide what is obviously bad for someone else? Leave contract contents to those adults who participate in them. If either of the parties think provisions are “obviously bad”, then they won’t sign.
I mean that's a pretty elementary interpretation to say the least. If you're struggling to make ends meet and are considering Uber for a few extra dollars every week are you going to care whether or not there is an arbitration clause? Even if you know it's bad you might be willing to risk it.
I agree that this isn't a monopsony situation. The reason that "agency" is meaningless has more to do with the power imbalance of the individual relative to any large corp -- there doesn't need to be only one option for the negotiation to be a farce.
I too am always asked to sign arbitration waivers by medical providers. I never do, and I make sure they’re aware of it. I’ve yet to encounter one who will decline to treat me or my family because of it.
Absolutely. Too many people underestimate a polite but resolved refusal to sign (without modification) any contract (including recipts!) whose terms you do not agree to. Not all, but many orgs will oblige if you don't seek to abuse it.
Obviously Ymmv, not a lawyer, free advice from random internet stranger, caveat emptor, etc, etc.
The contract already exists with the drivers and already contains that clause. The court ruled that, as a consequence, Uber can force the drivers into arbitration.
The word “forced” is perfectly reasonable to use here. If I signed a contract requiring me to pay money, and I didn’t want to pay, and finally a court ruled that I had to pay; it would be fine to state that the court ruled the other party can force me to pay.
Except that the headline as written suggests that Uber is doing something unfair. Since it is the drivers' appeal that has been rejected by the Court maybe some alternative headline could have been:
"Court Reminds Uber Drivers that Contracts Are Enforceable" or
"Drivers Waste Court Resources Only To Discover That Contracts Are Enforceable"
Well, yes. That is my point. The framing is designed to make you think Uber has done something unfair. Different framing would either not be news "Contracts are enforceable" or be designed to make you think the drivers did something wrong "Drivers Waste Court's Time".
Of the three I think the "Uber did something wrong" framing is least accurate, but is probably the best clickbait.
My point is that "forced" doesn't imply anything about which side is right. The side doing the forcing is often in the right.
Your other framings are completely bogus. They miss the actual news, which is that arbitration clauses, specifically, are enforceable. This was an open question with good reasons to think they wouldn't be, so "Contracts Are Enforceable" doesn't capture what's interesting about it, and "Drivers Waste Court's Time" is just plain wrong.
It is my understanding that this is pretty established law (arbitration clauses). But in any case if it isn't, then I think a less pejorative headline would be "Uber Ruling Strengthens Arbitration Clauses" and not "Uber Forces ...."
Very HN of you to replace force in the title with “enforce”.
Here it is in a sentence:
By enforcing the terms of the agreement, Uber forced binding arbitration on the contractor.
If the contractor Filed a Complaint before a court in breach of the arbitration provision of the contract, Uber could have waived its contractual right to arbitration and allowed the case to proceed, but instead they forced the contractor into arbitration by enforcing the agreement. There is an obvious reason Uber elects to put the arbitration provision in its agreements and there is a reason they didn’t waive that provision when push cane to shove...it benefits Uber.
The point I was trying to make that the court/law is the enforcer here, not Uber. I think the headline is misleading in this respect.
Your point that a party to a contract could waive their contractual rights is true but I would also argue that you are also choosing words to frame the narrative when you say the Uber "forced the contractor" rather than saying that Uber exercised its contractual rights to resolve the dispute via arbitration. In fact isn't the contractor who is trying to "force" Uber to give up its contractual rights by claiming that the contractual terms aren't valid? [edit: corrected are to aren't]
There is a larger discussion about the value/fairness of arbitration as a mechanism but as I understand it, it is established law that arbitration clauses are legal and I don't think anyone is arguing that Uber has "forced" someone to enter into the driver's contract with Uber.
But there is nothing special about Uber, or the arbitration clause, or the contract in this regard. So why is the headline written as it is and why are you insisting on this way of framing the argument. You are choosing to characterize the normal enforcement of contract law as something extraordinary and by the choice of words framing this as something that is unfair. At least that is how I interpret your wording and how I also interpreted the headline.
The fact that this particular contract involves Uber and drivers and an arbitration clause is irrelevant to the larger idea that contracts are indeed enforceable. That shouldn't really be news.
It involves uber because it involved a court case with uber. Ask the mods to update the headline to remove the other party from the court decision if it upsets you that Uber is named. "Contracts are enforceable" is a meaningless headline, and you know there's more to the story there. It's a case involving a forced arbitration clause. Hence, the word force. You may be interpreting things incorrectly. Consider that possibility.
I think the idea is that "force" sounds like Uber is doing it without a prior arbitration agreement. "Enforce" sounds like Uber is doing it after an agreement with drivers. The latter is what is actually happening.
It's a small difference but it matters. The power difference is a separate issue between employers and employees is a separate (important) issue, though.
Some arbitration agreements make arbitration mandatory by default, according to their wording; others simply give either side the right to choose arbitration.
The de facto effect is the same except in the rare case where a court sees the wording of the
first kind of contract and dismisses the case on its own initiative, since otherwise the arbitration clause would only be enforced on the motion of a party, without which the right would be waived.
But it's not formalistically wrong to use the verb "force" to describe "exercising a contractual election" as opposed to merely "not waiving a default provision of the contract."
The arbitration agreement is a "forced arbitration" agreement. It's a small difference but it matters. The law enforced the validity of the contract, the contract forces the arbitration outside of a court of law.
I don’t think it is misleading at all to say Uber is “forcing” drivers into arbitration. As the employer, they hold all the power in the relationship. Do you really think an Uber driver could make a $10B+ company do anything?
Apple can FORCE iPhone users to hand over HUNDREDS OF DOLLARS under THREAT OF VIOLENCE.
(That is: you have to pay money for an iPhone, and if you take it without paying the police may come after you.)
I personally think arbitration clauses in situations where the contract is essentially non-negotiable (company/user, company/worker) are basically a way for corporations to opt out of the civil court system, and one can make the case that they should therefore not be allowed (though this is a question for the legislature more than the courts).
In any case, you are absolutely right about the headline.
In theory, people enter into contracts under their own free will. In reality, Uber has tremendous relative power in that relationship, like every relationship between a large corporation and an individual worker. Contract law, if I understand correctly, takes into account the relative power of the parties. As a simple example, Uber has a legal department to create and review the contract; most drivers don't have attorneys to even review it; many/most will not grasp the legal implications and they almost certainly can't negotiate it.
I'm not saying that invalidates all contracts and that the employee has no free choice, but it's false to say that Uber does not have much greater leverage.
> Contract law, if I understand correctly, takes into account the relative power of the parties.
It really doesn't, at least not in the US.
There are a bunch of things that are necessary for a contract to be considered enforceable, but the two that are relevant here are "meeting of the minds" and "duress".
"Duress" is the obvious one, but it's a really high bar. It usually means something like physically threatened or blackmailed or literally locked in a room and told you can't leave until you sign. There's not generally a case that an employee or contractor was under duress from their future employer because they always had the option to not take the job in the first place.
"Meeting of the minds" is a bit more subtle. The parties have to believe they're agreeing to the same thing. This is also hard to show, though. Generally speaking, if you've been given the full text of the contract and had ample time to read through it then you are legally considered to know and understand its contents. There are a few cases where shrinkwrap licenses and extremely one sided terms of service get rejected under this theory, but it normally requires the parties to have signed materially different documents or for one party to be able to show that they weren't given adequate access to the document before they signed.
It's also worth noting that contracts are basically considered valid until proven otherwise. So even if there is a case to make that you shouldn't need to comply with some terms of a contract you are bound by you still need the resources (both in terms of relevant supporting documents and in terms of time and money) to actually prove that case in a court of law.
I've had American attorneys consistently tell me otherwise, though I've never had to put the idea into practice myself.
> So even if there is a case to make that you shouldn't need to comply with some terms of a contract you are bound by you still need the resources (both in terms of relevant supporting documents and in terms of time and money) to actually prove that case in a court of law.
Perhaps in theory, but IME the reality is the opposite: A contract is only worth what you are willing to invest the resources - money, time, attention, and frequently social/political capital - in enforcing.
> As a simple example, Uber has a legal department to create and review the contract; most drivers don't have attorneys to even review it;
I don't understand how legal system can be fair till the above is true. Individual, from the start, is on the loosing side. It should be illegal to sign things you are not qualified to understand. You can't get a prescription medication without a doctor reviewing your case first -- why can you sign a 100-page legalese? You are certain not to know what you are doing.
Arbitration is nothing more than a spectacle. Everyone is on the company payroll there, directly or otherwise -- house always wins.
> "Unfair terms are void, where they appear in standard form contracts signed with individuals "whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption."'
This would not apply to the Uber driver case, but it would be a welcome change nonetheless.
Because meeting of the minds is dead under arbitration and contracts of adhesion. You do not have to understand your loss of rights to lose them under arbitration. You do not have to understand that your right to free speech will be squashed because the proceedings of arbitration may be mandated as secret. You and your rights are bound.
My understanding is that arbitrators do actually rule against the company from time to time, it's not a pure rubber stamp.
It seems like one thing to do would be to make sure to rule against the company for small cases with limited damages, to keep up your credibility and ensure that the big cases always go in the company's favor. I don't know if arbitrators do this, but I wouldn't be surprised.
This comment overlooks the fact that the U.S. court system is currently disagreeing with itself over whether the practice of forced individual arbitration is illegal or not. The last time SCOTUS had a case about this in I think 2016, they divided sharply by one vote. This is yet another case involving it where the courts who saw it disagreed with each other.
Dammit. This is a true threat to everyman. Class actions don't benefit everyman directly, but they are indeed very powerful shapers of corporate behavior.
Congress needs to act ... oh wait, silly me, I forgot they are beholden to corporations not voters.
Can't Uber force a driver it has a dispute with to engage in binding arbitration, rather than resolve the case in court, which is typically the entitlement of both parties?
If the driver agreed to a contract that has a clause that expressly said that they could, then yes. The court ruled that such clauses in contracts can be enforced. Without the contract saying so, Uber wouldn't have been able to do this at all.
Because it’s almost universally agreed that some terms are not acceptable and thus not enforceable. Selling yourself into slavery is a common example. More gentle would be a contract where you agree to a pay rate that is less than the minimum wage.
The disagreement is merely over which side of that line arbitration clauses fall on. I happen to think that the right to have your grievances heard in court should be considered fundamental and inalienable.
Indeed. Minimum wage laws will probably soon no longer apply, because nearly all laws are superseded by arbitration, including state ones. It will not be long until we reach that point where you can easily and accidentally agree to work for 1c/hr with a carefully contrived contract. And, as long as they can secure an arbiter to rule against you for signing that employment agreement, you will be subject to it.
It makes me wonder if we're about to see a large increase in corruption. In societies where the enforcement mechanisms are widely perceived to be in the pocket of powerful self-interested organizations, workers often don't just lie down dead and take it (well, some do, but not all). A significant fraction instead turn to covert activities that subvert the effectiveness of their employer and enrich themselves, but can't be easily detected. So the Uber driver might hold to the letter of his contract, much as it screws him, but surreptitiously pass Uber data on to Lyft as a side job. The service worker may put in the hours according to their contract and hop to it whenever the boss asks, but when the boss isn't in, they're going to ask for a little bribe under the table to actually give you service. The boss might even be in on it, splitting the pool with his workers so they can slack off and demand bribes even when he's looking but never reporting their side business to corporate management.
I've always wondered about the logic of the certain faction who wants to roll back basic protections of the rule of law to some fraction of society. Or actually, I get it - they always believe that they're in the fraction that will come out ahead, and can co-opt the enforcement mechanism to do their bidding. But I think a lot of these same interests underestimate the degree to which they depend upon the norms of functioning democratic society. Also common to high-corruption societies is the need to hire private security & intelligence forces to prevent a disgruntled rival from offing you and your whole family; are the new corporate oligarchs willing to go there, and live in that fear just so they can make more money?
Go work at any retail or food service job for a well known company. You'll find constant theft and shrinkage from employees just not tracking loss of product. Many people on forums like this act like it's because that class of people are less trustworthy or incapable of delaying actions for future benefits.
That may well be true for some of the population, but I saw a large portion of employees whose viewpoint was, "Why wouldn't I do this? The company doesn't even pay me enough to live". I saw many times where it only took one bad week where someone went hungry for a few meals before they started stealing food or medicine. It won't take much for that viewpoint to spread as more and more people get pushed into the "have nots" group instead of the "haves"
Best I could find is that unions in a given industry bargain for their wage. There is no minimum wage law that I could find. From what I read, it seemed to be the consensus of the unions that minimum wage law might actually hurt their bargaining power by driving wages down.
Am I missing something? There's a huge difference between negotiated wages between two parties (one being a union), and a law mandating a wage.
These aren't made up. States are feeling compelled to add laws to limit non competes now, when they historically haven't, due to things like sandwich shops having non compete clauses for their minimum wage employees. Massachusetts recently enacted regulations on non competes in response to those kinds of abuses
Did those sandwich shops have non-competes that forbade the employee from working for any other company no matter the industry, or just sandwich shops? It's still stupid, but the hyperbole above is about non-competes forbidding getting any other job anywhere ever again.
If I recall correctly it was food prep, which covers any retail shop, like Walmart, that also serves food. That happens to cover the vast majority of all minimum wage work. As companies are growing larger and larger, and entering more and more industries, those uncurtailed non competes _are_ going to effectively be a complete stop on working at other firms.
It's not stupid. We are watching this happen. If you think companies should be free from any of this regulation or even discussion about their practices then you are free to go to Somalia and live in a regulation free utopia
Secondly, I just can't see us letting things go that far. We'll have to agree to disagree with that.
I do agree that binding arbitration clauses are terrible, and I accidentally put myself in a position where I had to sign one at my last job. We had worked out terms, and a start date and I quit my old job before I saw the employment contract. I went through and made edits, and the CEO was open to negotiating on it. There was a problem with their IP ownership clause he happily fixed, and if I wanted to, he was willing to get his lawyer involved in the removal of the arbitration clause. I let it go though because I would have been jobless if he decided I wasn't worth it.
The problem though is, how do you strike a balance between leaving people free to make economic decisions they deem in their interest vs being taken advantage of by predatory contract agreements? Arbitration and non-competes are bad, but I'm happy to agree to them...for a price.
I agree that striking the line is difficult. The only way I see for the government to have a balance is to look at aggregate values. For instance we're seeing corporate profits and GDP skyrocket right now but worker wages aren't and haven't for decades. That would indicate to me that workers need more support from the government. On the other side if we saw companies stagnate while workers were pulling more and more out in compensation that would be a good time to loosen regulations on companies.
Would you care to assign any other positions to me?
I feel like you've lost sight of me simply taking objection to this histrionic idea of companies forcing people to work for them for 1c/hr. It's never going to happen, and you don't have to be a Somali pirate to see how absurd this argument is.
I've put forth no other argument about anything, regulation or otherwise.
I don't find the idea histrionic. We are seeing a constant and repeated degradation of worker's rights in ways that are both limiting what workers are allowed to do outside of their employment with a company, and in limiting worker's abilities to seek redress for any damages done to them by their employers. We already see industries where every single company operating in that industry requires arbitration agreements which employees have no protection against. The courts have said its kosher, the legislature has no intention of blocking it at a federal level, and for many classes of workers there are no options without arbitration agreements. That is just removing the protection of the courts from a massive number of workers.
Combine this with other controls on workers, like companies getting a say in whether or not you get unemployment, and workers are being forced more and more into a choice of do what the companies say or starve. I don't see how this doesn't end with virtual slavery like being forced to work for 1c/hr but you stand here and say its stupid and hyperbolic.
I admit that I did assign you a position you never stated. I have mostly seen arguments against discussing issues like this come from die hard libertarians who think there should be no sort of government interference in agreements between employees and employers and I made an assumption about you without evidence, for which I apologize
What about the time that workers were literally gunned down for not allowing themselves to be taken advantage of. Once you look at historical examples, these crazy things people are saying end up being less crazy than what historically has happened.
So, what happens when a worker signs such an agreement and it is upheld under arbitration?
Heck, it used to be pretty common to have workers with contracts that not only forbade them from working elsewhere, but forbade them from leaving their job at all. The hypothetical extreme of “sign a contract to sell yourself into slavery” is not actually very hypothetical nor extreme.
> But not required to continue working there. It should be pretty easy to find a job that pays more than 1c/hr.
That's pretty glib and misses the point: labor laws like the minimum wage exist for a reason. The tl;dr is that the free market didn't solve the problems the laws were meant to solve 100 years ago, and the free market isn't going to solve them now (if the GP is corrected and forced arbitration gives employers a way to bypass the laws).
The parent was talking about people being forced to work for 1c/hr. It's an absurd claim, and that hypothetical person could walk into basically any other job. Preferably one paying more than minimum wage.
"Agency" approaches meaninglessness when you can't understand what you're agreeing to, can't afford a lawyer to interpret it for you, and can't get access to the courts later because of an arbitration clause.
Because in almost every contract where an arbitration clause exists, it's because there's a gross disparity in the negotiating power between the parties, and the clause enables the more powerful party to deny the lesser the primary means of equitable redress of contractual violations stemming from this power disparity: the courts.
Because there are some terms which are antithetical to law. If you sign a contract stating that you're willing to become someone's slave for $x, that violates natural rights and would be voided by a court.
That is the direction it is going. You will soon be unable to conduct your life w/o losing your fundamental rights to contracts of adhesion with losing terms and being bound by the whims of an arbiter who's not subject to regard for the law.[1]
The biggest negative of arbitration isn't that individuals lose, though they do. It's that class action lawsuits are undermined. It used to be that a legal firm could find a group of people harmed by a company, create a class action lawsuit, and make money if they won/settled that one case. Often class action settlements had requirements that bound the company.
But each arbitration is it's own case with it's own particulars. If a company screws over thousands of people, taking each of those to arbitration means that's thousands of hours more work then a single class action. Further, settlements are generally restricted to the specific issues a particular party has issue with, and there is generally no way to guarantee changes for the benefit of similar parties.
There are only two ways to counter unequal power in deciding contract terms that mandate arbitration, regulation or concerted action. But not a class action.
This is why Unions are so important. I understand how it might not make much sense for high wage jobs like engineering to Unionize but I really can't see the negative side to Unions for low wage jobs for everyone besides the employer (I do not buy the increase consumer price or laissez-faire arguments). One of the best benefits from a Union is a sponsored lawyer to represent you when you don't have the money to fight the big guys.
I think a lot of labor situations are different (not just low vs high wage). With Uber, one of the defining characteristics is that there are (basically) only two employers (Uber and Lyft). If there were hundreds of equivalent employers, the employer doesn't have the same control over the wage. When labor has few or one option, unions can certainly provide a counter-balance to the power that employers have.
However, Uber also provides an easy way to view consumer price increases due to wage increases. I know that Uber has moved to more of a fixed-price model now, but let's pretend that Uber still had a per-mile/minute model. Uber charges $X per mile and $Y per minute and Uber takes 20% giving 80% to the driver. At that point, the absolute most that a union could increase driver wages without increasing consumer prices is 25%. If Uber was charging $1 and drivers were getting $0.80, if the union wanted a 50% raise Uber couldn't still charge $1 because drivers would be taking $1.20.
I think the network effects of Uber and Lyft make it hard for labor to have power in those situations. However, given that Uber's gross margin is a percentage of receipts, it's easy to see how it would push prices higher. I'm not saying it's not a worthwhile trade-off, but it's hard to argue that Uber drivers getting paid 25% more wouldn't cause fares to increase.
As a society, we chose to push children out of the labor market even though that made things more expensive. We pushed for weekends, time off, the 40-hour workweek and overtime, even though it made things more expensive. At the end of the day, racing to the bottom in the pursuit of lower prices is not an unmitigated good.
(To be clear, I'm not saying you disagree with any of these points, these are just my $.02.)
The argument here isn't about wages, though: it's about using collective power to ensure that workers don't get pushed into bullshit arbitration when the company does something awful.
(Not that uber would ever do anything awful, of course.)
I think the reason why Uber and Lyft drivers won't unionize is because there's little incentive for them do do so.
Not that many drivers actually drive full-time for a living. A lot of them are just temps. They do some driving on the weekend to make some extra money, they're doing it temporarily while they're between jobs, and so on. If they get fed up with Uber and Lyft, they'd be more likely to just walk away than fight.
Case in point: I rode with one guy a few months ago who was on paternity leave... he took up Lyft driving because his wife had no paid maternity leave so he drove during his three months paid paternity leave to make up for the family missing out on his wife's income for a few months. Once his wife is working again, he's done driving.
And we're also, as a society, at a point where service jobs are almost fungible. If McDonald's fires you, you can get a job at Taco Bell. Even the same kind of service job doesn't matter. If you get tired of Uber jerking you around, you can find a restaurant and become a waiter. None of the skills involved in these jobs are particularly hard to train for. Every service job is going to require that you have basic customer service skills, and you can take those from job to job. Driving is a fundamental skill in most of America; if you can drive a car and understand Google Maps, you have the skills to drive for Uber or Lyft. For other service jobs, you don't need years of experience to take people's orders at a counter, scan groceries, or do tier 1 customer support.
When unions first came to prominence, we had an industrial economy, not a service-based one. Chances are, you lived in a small town where there was just one factory, and the town probably only exists because of the factory. If you got fired, you were screwed. If the factory closed, everyone in town was screwed. And if you've been working with the same specialized proprietary factory equipment for years, it's going to take a long time to re-train you on another factory's equipment, so that's another disincentive to switching jobs. Hence unions.
tl;dr Service workers, including Uber and Lyft drivers, don't unionize because losing your job doesn't mean that you and your family are hopelessly screwed.
At the end of the day, unions are a means to organize labor. Individual workers have very little power against large corporations, especially if they end up conspiring with each other. You could take them to court, but they have more lawyers and more money to spend on them. We see the benefits of non-union representation now, but what happens when tech turns from feast to famine?
Controlling supply is the important piece, not being in a union. Once you limit the supply and limit your competition, you don't need a "union". They make up the leadership of the organizations that setup funding for the residency positions, which control how many doctors can be trained every year, effectively controlling the supply of doctors. No one, other than doctors, is incentivized to keep this supply constrained, which I assume is due to lobbying by doctors.
>Medicare-supported training slots are frozen where they existed almost two decades ago, perpetuating inequities in the geographic distribution of training slots and ignoring changes in the geography and demography of the U.S. population
The AMA is not a union. Unions don’t restrict the supply of labor. They just help workers collectively negotiate for pay and conditions. Anyone can join a union, even at a “union shop” by getting hired at a place that is unionized. I was a UFCW member in college. Eligibility was automatic after I got hired.
> I do not buy the increase consumer price or laissez-faire arguments
Ignorance is bliss I guess?
The economic research of the effects of unions on consumer pricing is well established. That you choose to willfully disbelieve the economic research in that area unfortunately does not make it less valid.
Can you please point me towards a paper that explains this well established effect? I haven't came across any that explicitly states Unions are bad for consumers since workers tend to be consumers (high wage = higher disposable income) especially on a Macroeconomics scale. I have seen studies explaining how Unions hurt firm growth since it shifts profits to wages which reduces cash holdings (which reduces the conversion of cash to assets, and the finance cycle continues). But the Macroeconomic of the redistribution of wealth (wage vs profit) is still to be studied, especially in our sharing economy world.
I'd be happy to pay a slight increase in a product's cost if it were clear to the buyer their use of labor was ethical. Companies used to put union stamps on these sort of products back in the day.
However, I'm unsure how well Uber drivers could unionize, since they are typically classified as contractors (choose rates, hours, etc.), not employees.
And collusion of employees (unions) is permissible. Collusion of businesses is less so.
If a union only kept to things like safety and minimum salaries I could understand the argument better, although I still don’t support them. The problem is when they start putting in seniority rules (as if all employees are replaceable cogs), banning people from helping out with different jobs (“only the pipe fitter can replace this particular screw”), and making it extremely difficult to fire people.
Unions are a very broad umbrella term, like corporations, to describe a type of organized labor. Corporations, unions, and their practices all exit on a spectrum of good and bad.
A union exists to tell the business owner how to run their business by force. The threat is a strike, or worse (damaging equipment and reputation).
The reasons to allow a non-owner, non-governmental power like a union to force the business to change can make sense and pull at your heart strings. I would prefer, if we are to encourage unions, that it stays about safety and let the free market sort the rest out. People can always find new jobs.
Nice propaganda, "By force" would be hitting your employer like a pinata until money came out.
A union exists to make the exercise of the employees rights more meaningful by doing so collectively. If you acknowledge that an individual employee has a right to ask for more money or changes to how the business is run and decline to come to work its difficult to understand how all employees don't have the same rights collectively.
Incidentally this is an instance of the free market. Labor is a market. They are selling YOU their time and collaborating to get a better deal.
But a business owner can’t fire everyone because they are starting a union, which by your logic they should have the right to do if this is a market. The whole point of a union is to limit what managers can do and tie their hands.
So even if the business wants to fire unionized labor and find new and better labor, they can’t. They must now work through a tangle of rules to make changes to their business.
So even if the business wants to fire unionized labor and find new and better labor, they can’t.
Those terms exist precisely to target the abuse you are describing: firing experienced, knowledgeable workers for "better" employees that are inexperienced and know jack-shit about what they're supposed to be doing and whose only qualifications are being cheaper.
Let's face it: in most unionized gigs, the contribution of each individual worker isn't significant, so the marginal gains of hiring a "better" worker is generally immaterial to the bottom line. In the cases where that's not true, the union contracts generally have reduced job protections that make it easier for underperforming workers to be let go (on the basis of objective criteria).
They can individually fire workers that perform poorly. Not being able to fire people for organizing is why we don't have people being crushed in machines and thrown away like trash to be replaced with more disposable people.
You argue that the business (a collection of individuals) has the right to negotiate with an individual. Then argue that a union (a collection of individuals) should only have limited rights to negotiate with a business in return.
I simply disagree, but can you explain to me why government workers, who by definition have a monopoly on their labor, have the right to unionize and strike, holding the taxpayer hostage?
You are moving the goalposts now its not all unions just government workers. Forcing them to work against their will would violate their rights. The government can negotiate for their labor or do without it. In the long run they could hire new workers to the the same job nobody is holding anyone hostage.
Government employee unions are the most powerful unions in America. They can choose not to educate society’s children to be paid more. That is a lot of power.
How many industries in the US are concentrated in a handful of large companies? There's only Lyft and Uber for rideshare. Drivers could go on their own, but there's no open source platform to just offer services on that's as easy as those companies. During peak surge times, Lyft and Uber are actually more expensive than New York taxi services, but riders will reach for the app out of habit.
The fact that people COULD find new jobs isn't a counterargument for unions.
If collectively nobody works within each given business to improve workers conditions at that business where will all the disaffected workers turn for a better option.
Within an industry major players have no reason not to fix conditions at just crappy enough that people don't leave faster than we can hire new cogs.
Anyone who things the free market just magically fixes things ought to look at the labor market in the 20s.
This is not the 1920’s, and labor rules (and many different regulations) designed for the 1920’s no longer match reality.
Unemployment is near historic lows. Any employee dissatisfied can find a new job. Competition between employers drives better benefits, wages, and working conditions.
That's a presidentially arrogant statement to make, particularly in the middle of a discussion regarding the gig economy.
> The public typically perceives a low unemployment rate as reassuring because it suggests that everyone who wants a job has one. But the broader set of jobs data suggests that’s not the case. ”As usual, the consequences of truly no growth in the labor market leaves particularly politicians to emphasize nothing other than the unemployment rate,” Snider says.
The unemployment at historic lows, the stock market booming, and all signs point to a vibrant labor market? Better find an article that claims the unemployment rate doesn't matter and the economy is actually bad, because mainstream statistics disagree! I think you should stop believing conspiracy theories.
If a business can’t fire an employee because a union demands a younger employer is fired before the older, regardless of performance, this is not a free market.
There is nothing preventing a workplace from negotiating a unionized employment contract with a more limited scope such as you describe. I share your desire for something less rigid than the (very real!) unions which match the stereotype you describe.
Though I would like some intermediate restrictions on the ability of an employer to summarily fire an employee for no good reason, short of extreme difficulty. Like, maybe some advance notice or severance payment in the absence of misconduct - the unemployment insurance regime is often severely inadequate, and gaps in employment make it harder to obtain subsequent jobs.
Plus some chance to refute allegations of underperformance makes sense - it can be real underperformance or it can be a cover for discrimination, both happen.
Creative unions, like those in Hollywood, don't have seniority rules, and they do an excellent job of protecting their members' interests. They also don't have any of the other problems you describe.
They still have rules about who can be in the union, and increases the cost of film production. You can't simply join the union, it is a guild system. I don't like rules that keep out new employees or drive up the costs of film production.
I'd imagine there's an entire secondary market of arbitrators. The real juice would be in some sort of ranking system for them, like a reverse-glassdoor.
>You may, without a meeting of the minds, sign away your basic rights according to the courts.
You actually cannot sign away your basic rights as contract cannot supersede state or federal law. You may argue that one's right to litgation _should_ be considered a basic right, but currently it's not.
We may weep for the 7th amendment, which guaranteed the right to a trial by jury in disputes, as long having been bypassed and a currently dead amendment.
Alexender Hamilton: "The civil jury is a valuable safeguard to liberty."
Thomas Jefferson: "Another apprehension is that a majority cannot be induced to adopt the trial by jury; and I consider that as the only anchor, ever yet imagined by man, by which a government can be held to the principles of it’s constitution."
They tried, but greed is too strong. You've lost the right to a trial by jury. What little bit is left is dead under mandatory binding arbitration.
> You may, without a meeting of the minds, sign away your basic rights according to the courts.
This is wrong on so many levels. This is one of the reasons why euthanasia is not legal; you cannot legally write a contract to get yourself killed: the person who kills you will be a murderer regardless if the murder was consensual. Similarly, you cannot consent to slavery.
Cynicism aside, this is a result of freedom of contract right? I'm still not sure how it's enforceable to agree to use a different legal system: if both parties are in the US they can agree to be bound by French law instead? Or a coin toss to resolve disputes?
Arbitration is enforceable because the law says it is. If there was a law saying that French courts or coin tosses were enforceable dispute resolution mechanisms then you could use those instead. https://en.wikipedia.org/wiki/Federal_Arbitration_Act
There are very many rights that you can actually not legally sign away. Well, you can make a contract that signs them away, but it won't be valid in court. For example, you can't sign yourself away to slavery as a result of not paying your debts
The court will not decide the unconscionability of that contract. An arbiter will. The conscionability of a contract that has mandatory binding arbitration must be decided by the arbiter. The courts are only involved in enforcing the arbiter's judgement, which is not subject to any review. The arbiters judgement is not subject to the courts. The arbiter could decide you were meant to be a slave by the contract or another arbitrary decision[1] that has nothing to do with the contract and assign you a 10 million dollar penalty. Under US arbitration, I argue you have no real rights. With no limit to financial penalty and no review by courts of law other than to compel others to steal your property at the whim of an arbiter, there are no real rights left.
[1] Arbiters are not limited to the subject of the contract nor are they limited to the subject of the dispute.
As I understand it, it's questionable whether Congress ever actually intended it to apply to state-law claims. The Supreme Court just unexpectedly interpreted the law that way 60 years after it was written. Since then, binding arbitration has proliferated and US states have effectively been unable to create any kind of consumer or employee protection that can be enforced in civil court.
Can you provide evidence for that position? The law itself clearly mentions interstate transactions and includes directions to "any court of the United States". I also can't find a Supreme Court case matching your description.
"CHAP. 218.-An Act To make valid and enforceable written provisions or agreements for arbitration of disputes arising out of contracts, maritime transactions, or commerce among the States or Territories or with foreign nations."
Unless Reuters changed their own title, the submitter broke the site guidelines by editorializing (submitted title was "Uber can force drivers into arbitration: U.S. appeals court".) Please don't do that. Accounts that do it eventually lose submission privileges on HN. From the guidelines: Please use the original title, unless it is misleading or linkbait; don't editorialize (https://news.ycombinator.com/newsguidelines.html).
One reason we have this rule is that when people break it—especially when they break it to editorialize—the comments tend to fill up with distracting arguments about the title.
I copied and pasted the original title, as I always do -- I'm familiar with the guidelines (and have in fact brought similar issues to the mod's attention before).
Forgive my ignorance, but what are the negatives to arbitration? Isn't that basically a private court system used because the government court system is so slow and inefficient? Isn't that a good thing?
The company chooses the arbitrator.
The arbitrator is therefore incentivized to find in the company's favor. If they find in favor of the "plaintiff" (I would imagine that's not what they're called in arbitration) too often, then the company can simply find a more friendly arbitrator.
As an example, look at the Comcast arbitration agreement [1]. They do not want to choose. They want it to be either the AAA or a judge making the choice. You might also notice that they are totally fine with you suing them in your local small claims court.
I've spent money on lawyers' fees in order to make changes to offered contracts in the past, only to have them rejected outright. (It makes a certain amount of sense, as $CORP isn't going to have their legal team spend hours negotiating/revising a contract with a vendor that's only worth $NNk.) Unsurprisingly, this is not an area I and, I would imagine, others like me have a lot of room to experiment in: 1) lawyers are expensive and 2) missing out on that contract might mean missing out on $BILL payment. However, _most_ contracts I'm given these days contain an arbitration clause. Having had to sue someone in small claims court (I was successful!), I _loathe_ the idea of being forced into a kangaroo court.
Anyways, I'm not looking for free legal advice, I'm just curious to know how others are navigating this issue.