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Employment Arbitration–Death by a Thousand Cuts

This Bloomberg article is illustrative of the problems of individual arbitration in class action employment cases for employers.  Although employers have hailed recent pro-arbitration rulings as a victory, there is always a chance that employees will actually file those arbitration in large numbers.

As described in the Bloomberg article, there are 60,000 pending Uber arbitration filings which could cost $600,000,000 to defend according to Bloomberg.   I actually think that number is low:  the employer’s arbitration fees typically are more than $10,000 each–often approaching $25,000 at a minimum for a simply arbitration.

While one may assume Uber can afford it:  imagine this scenario:   A small manufacturer with 500 employees has a small wage violation that could result in damages of $1,000 per plaintiff.   They could easily settle the case and get a full release on behalf of ALL of their employees for $500,000 if the case proceeds in court and they strike an early deal.  But, if even half of the employees file individual arbitrations, the employer likely will pay $2.5- $5 million alone in arbitration fees.  (Assuming 250 individual arbitration at $10,000 to $25,000 in arbitration fees each).  This does not include employer’s lawyer fees or the fees of the plaintiffs’ lawyers.  Nor does it include the base wage liability.   And, if does not cover future claims by the other 250 workers who have not yet sued.     And, again, even if the employer were to win 90% of these arbitration hearings, they would still pay out millions in arbitration fees.

 

 

 

 

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