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Uber scraps fine-print arbitration agreements for some sexual harassment cases

Uber recently capitulated to public pressure and decided to no longer require victims of sexual harassment or assault to bring their individual claims against the company through arbitration. Uber, like many companies, puts arbitration clauses into the fine print of agreements that employees, drivers, and passengers must agree to in order to do business with Uber. Just about no one reads this fine print and many probably would not understand what the fine print meant even if they read it.

Arbitration, when used appropriately, can be an efficient and fair process. It can be fair when the parties to the agreement have equal bargaining power and one party does not have a built-in advantage over another if a dispute goes to arbitration. For example, companies and unions often agree to use arbitration and that process is usually fair and efficient. However, the way Uber and many other companies use arbitration, serious problems can get swept under the rug and go unaddressed because arbitration is often secretive and slanted in favor of large companies.  (Please see other posts on this blog regarding arbitration for an explanation of why it is problematic.)

For these reasons, Uber faced increasing pressure to permit sexual harassment and assault victims to pursue claims against the company in court, instead of through arbitration. Interestingly, Uber only exempted sexual harassment and assault claims from the arbitration process. So, for example, if the company systematically discriminated against racial minorities, those claims would still have to go through the unfair arbitration process. Furthermore, Uber’s arbitration fine print still does not permit people to file class actions against the company for sexual assault or harassment.

“Anything else that is not sexual assault or sexual harassment, those will be typically subject to arbitration and … Uber is like most other companies in that regard,” Uber General Counsel Tony West said. The fact that most other companies follow this approach is true – and that’s the problem.