Misclassification in the Sharing Economy: It’s the Arbitration Agreements

Originally published by Beth Graham.

Elizabeth Chika Tippett, Associate Professor and Conflict & Dispute Resolution Program Faculty Co-Director at the University of Oregon School of Law, and Bridget Schaaff, University of Oregon School of Law, have published “Misclassification in the Sharing Economy: It’s the Arbitration Agreements,” Rutgers Law Review, Forthcoming.  In their journal article, the authors study the changes made to several companies’ Terms of Service agreements following the Supreme Court’s decisions in Concepcion and Italian Colors.

Here is the abstract:

This study examines whether companies in the sharing economy altered their contract terms following two landmark Supreme Court decisions affirming the enforceability of class action waivers in arbitration agreements: AT&T Mobility, LLC v. Concepcion and American Express v. Italian Colors Restaurant. Many of the companies in the study appear to have been influenced by the decisions.

The study analyzes Terms of Service contracts from 38 sharing companies between 2009 to 2016. Prior to 2012, only about one third of companies used arbitration agreements, and few such agreements contained a class action waiver. By 2016, however, nearly two thirds of sharing companies included an arbitration agreement, and almost all included a class action waiver. These class action waivers remove the future threat of aggregate liability for misclassification of independent contractors. The addition of such waivers could explain in part why sharing companies have not reclassified their workers, even after experiencing substantial litigation.

This and other research papers written by the authors may be downloaded from the Social Science Research Network.

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