Arbitrator Decides if Misclassification Claim is Subject to Arbitration

In Zenelaj v. Handybook, 2015 WL 971320 (Case No. 14-cv-05449-TEH), the court said that whether a claim workers were misclassified as independent contractors was subject to arbitration should be submitted to an arbitrator according to the contract.  The workers, Vilma and Greta Zenelaj, were classified as independent cleaning professionals by Handybook, a company that provides an online system to match customers with cleaners.  The Zenelajs claim they were employees and erroneously classified as independent contractors.  As employees, they should have been entitled to benefits and protections given to employees such as pay for overtime, reimbursement of business expenses, meal periods and rest periods, and itemized wage statements.

The contract between Handybook and the Zenelajs provided that disputes were to be provided.  The Zenelajs said that this part of the contract was unconscionable, should not be enforced, and that their claims were covered by the arbitration provision.

The court decided that the question as to whether the claims were subject to arbitration was a decision that an arbitrator had to make.

This decision helps companies avoid class action lawsuits for misclassification claims if they have a provision in the contract that compels arbitration.  The court reviewed the contract and concluded  “In light of the Parties’ decision to conduct the resolution of their dispute in accordance with the AAA Commercial Rules, the Court leaves the question of arbitrability to be decided by the arbitrator in accordance with the clear and unmistakable intent of the Parties as defined by prevailing case law.”  Companies seeking to avoid class action lawsuits should make sure that their contracts with workers contain clear provisions that disputes will be resolved in accordance with the Commercial Rules including the jurisdiction of the arbitrator.

 

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