Postmates now allows drivers to opt out of mandatory arbitration

In fall 2015, the National Labor Relations Board filed a complaint against delivery service Postmates that challenged the legality of the company’s mandatory arbitration agreement between it and its contractors. In Postmates’ fleet agreement, which contractors must sign as a condition of hire, the company had required that workers settle disagreements through arbitration. In other words, workers were asked to waive their rights to pursue collective actions, like a class action suit, for example.

Yesterday, Postmates updated its legal document to offer contractors a way to opt out of mandatory arbitration. The company confirmed the change was made on Thursday, but denies it’s related to the NLRB case, which is still pending.

“Like our terms of service, we regularly update this agreement so it’s in line with our business needs,” a Postmates spokesperson stated.

The NLRB’s case against Postmates, originally filed in October, 2015, is broader than the mandatory arbitration issue.

According to a court filing, an unnamed customer service representative told the NLRB that they had been instructed not to discuss terms and conditions of employment, including safety issues, with other employees.

Indirectly, the case brought up another question, as well: whether or not Postmates’ drivers were considered employees. The delivery service — like others in the on-demand space such as Uber or Lyft, for example — considers its workers independent contractors, not employees. Most gig economy employers go this route because it means they won’t have to offer the workers the same level of benefits, like healthcare or overtime.

The fact that the NLRB got involved with Postmates indicates that it believes the contractors to be employees. In fact, a press release from the NLRB’s office in Chicago referred to the workers as “employee drivers.”

Postmates had earlier responded to the NLRB’s complaint back in October, 2016 by denying all allegations and requested the court to dismiss the case in its entirety.

However, one of the actions the NLRB had requested of Postmates in its original complaint was to drop its mandatory arbitration clause, which it described as “unlawful,” and alert all employees of the rescission.

Postmates did not drop the mandatory arbitration clause, exactly, in the agreement updated yesterday, but it did give the employees the means to opt out.

In a newly added section, the company explains that contractors have the right to opt out of arbitration, and arbitration is no longer a mandatory requirement for working with the company.

The new section reads as follows, in part:

Right to Opt Out of Arbitration. Arbitration is not a mandatory condition of Contractor’s contractual relationship with Postmates, and therefore Contractor may submit a statement notifying Postmates that Contractor wishes to opt out of this Mutual Arbitration Provision. 

The section continues to detail how the contractor can opt out via email or postal mail, and the time frame allowed for that action. It then states that contractors have the right to consult with an attorney, at their own expense, and says that class action waivers will still be enforced in arbitration. (Any contractor that doesn’t opt out is waiving their rights to take dispute to courts.)

The case itself between the NLRB and Postmates is still pending, but Postmates filed on February 10th a motion for abeyance, which is a request to put the case on a temporary hold. (The motion itself is not available, and requires an FOIA request to retrieve it. The NLRB confirmed the nature of the motion with TechCrunch, but could not comment on the details.)

Postmates’ claim that the modification to the contractor agreement is not related to the NLRB case seems suspect, due to the timing. The motion was filed on the 10th, then a week later, the contractor agreement is modified. Possibly, the company hopes to use the modified agreement as a reason why the case should be dismissed.