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Is Lyft Going To Make Its Drivers Sign Forced Arbitration Clauses?

April 3, 2016
Colson Hicks Eidson

The case over whether or not Lyft drivers are employees or independent contractors has come to an end. So what was the ruling? There was none…

Is Lyft Going To Make Its Drivers Sign Forced Arbitration?

The case between Lyft and its drivers was settled for $12.25 million. Many legal experts had anticipated that a verdict on the massive class action suit would shake the foundations of the “sharing economy.” It would have forced Lyft to treat its drivers as employees, and offer them benefits—which the company doesn’t have to do if the drivers are classified as independent contractors. However, this settlement has done little to answer the employment questions that have left many other companies hanging on the edge of their seats.

Uber is currently embroiled in a similar lawsuit with 240,000 of its drivers. Currently the company—which is like Lyft’s sibling rival—is appealing a court decision that nullifies a forced arbitration clause hidden in its driver contracts. If the company wins the appeal, then the class action suit will be thrown out of court. This would force drivers to pursue their grievances through the arbitration system individually, which very few would be able to afford due to the high costs of arbitration.

Sending driver complaints to arbitration would heavily favor Uber because the system often favors the party with bigger pockets and influence. Lyft would follow Uber’s example in this regard, but the terms of this latest settlement also forces the company to pay the costs to arbitrate drivers’ complaints. This means it would be easier for drivers to afford to arbitrate, but the settlement does nothing to change the favoritism of the arbitration system.

Right now the CFPB is fighting alongside legal professionals all over the country to ban forced arbitration clauses and protect your right to take a company that has wronged you to court. For more info on forced arbitration, and how to stop it, keep following the Colson Hicks Eidson blog.