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Towards Justice July Newsletter | TRAPs

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We’ve been busy supporting workers across the country to challenge stay-or-pay contracts that keep workers trapped in their jobs, workplace surveillance and automated management of workers, and the scourge of forced labor.

Last month, we brought a new lawsuit against tech bootcamp Smoothstack for locking our client into illegal TRAPs. A type of stay-or-pay contract, TRAPs effectively trap workers in underpaying jobs with poor working conditions by threatening them with having to repay the purported costs of training if they leave their jobs. Courts have already found similar terms illegal, but Smoothstack, we allege, includes the term in its contracts because it makes workers feel trapped in their jobs – regardless of whether a court would ever enforce it.

Now we’re seeing companies use forced arbitration as a “shield” to prevent workers from getting out of their TRAPs. Earlier this week, we filed a motion to appeal a decision by a federal district court forcing our client BreAnn to resolve her dispute with PetSmart through individual arbitration.

BreAnn Scally says she took a job at PetSmart because she believed the company when it said it offered its employees “free paid training” to help them learn how to groom dogs. Instead, they locked her into her job with $5,000 of debt to PetSmart if she left within two years, even if she was fired or laid off. Now, the company is using the same fine print terms they used to trap her in a job to strip her of the right to go to court to stand up for PetSmart groomers across California.

Our case on BreAnn’s behalf has already changed the conversation around TRAPs. The Federal Trade Commission recently proposed new rules regarding non-compete agreements that cover contracts like TRAPs that operate just like non-competes. And the U.S. DOL has filed a lawsuit on behalf of a different client of ours, highlighting how stay-or-pay contracts may violate minimum wage laws. But as long as companies like PetSmart can bury arbitration requirements amounting to get-out-of-jail-free cards in their fine print, they’ll continue getting away with trampling workers’ rights.

In these cases, litigation isn’t enough – which is why Towards Justice has called on federal agencies to prohibit contract terms, like these, that operate as non-compete agreements.

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What We’ve Been Working On

  • Letter to White House:
    • Last week, we sent a letter to the White House calling on the Biden Administration to create a coordinated response to the corporate abuse of workers. With the growing problem of workplace surveillance, we’ve seen companies track and collect data on employees’ eye movements, heart rate, speech patterns, and more. That’s why it is crucial that the White House coordinates with the Department of Labor, the Federal Trade Commission, and the Consumer Financial Protection Bureau, and all other relevant agencies to police these abuses of power, rather than pursuing siloed solutions that don’t deliver results.
  • Denver Anti-Wage Theft:
    • In January, we helped pass a wage theft ordinance in Denver with the help of those in the “Denver Anti-Wage Coalition.” We recently submitted comments to help the City effectively implement the law. Our coalition created and helped pass this city ordinance that will protect workers and allow them to recover unpaid wages from the deep pocketed-corporations who profit off their wage theft, including up-the-chain contractors who may not be their direct employer. Now, we’re staying involved in the implementation of the ordinance, to make sure workers are protected.
  • Antitrust challenge against Uber and Lyft:
    • Last year, we sued Uber and Lyft because our clients claimed that the purported “independence” these companies tout is a lie. These companies say their drivers are independent, and deny them labor rights like minimum wage, while also fixing prices charged to customers and otherwise manipulating drivers. That violates antitrust laws. Now we’re in court fighting against their claim that the drivers signed away their right to bring this case through an “arbitration requirement” in the terms and conditions of the app. Many drivers tried to opt-out of the arbitration requirement more than a dozen times, but Uber and Lyft say they didn’t do it correctly.
  • Legislative win:
    • We proudly helped enact the first-of-its-kind legislation to crack down on high-cost lending in Colorado by out-of-state banks. This is an important step towards ending predatory lending by state-chartered banks in their efforts to evade interest rates. Lenders shouldn’t be able to evade safe and fair credit protections simply by entering into a superficial relationship with a bank chartered in a different state.
  • Amendment A:
    • Our lawsuit to help people currently incarcerated who are still required to work while in prison, and are punished for not doing so, is gaining attention. In a recent article, 9News reported that the State of Colorado is still punishing hundreds of people for not working, even though Amendment A, which passed with more than 2/3 of the vote, prohibits the state from attempting to force anyone to work, even people who are incarcerated. We’re proud to help to support End Slavery Now Colorado and their work to bring this data to light.


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