The U.S. Supreme Court ruled Tuesday that trucking company New Prime Inc. cannot compel arbitration in a class action alleging it failed to pay independent contractor truck-drivers the proper minimum wage. The Supreme Court found that transportation workers engaged in interstate commerce, including those classified as independent contractors, are exempt from the Federal Arbitration Act (“FAA”).
Section 1 of the FAA exempts from arbitration “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Justice Gorsuch, who authored the opinion, said “When Congress enacted the Arbitration Act in 1925, the term ‘contracts of employment’ referred to agreements to perform work,” Justice Neil Gorsuch wrote for the court. “No less than those who came before him, Mr. Oliveira is entitled to the benefit of that same understanding today. Accordingly, his agreement with New Prime falls within [Section] 1’s exception, the court of appeals was correct that it lacked authority under the act to order arbitration, and the judgment is affirmed.”
The Supreme Court said that the Section 1 exemption also applies to independent contractors. They said that Congress’ use of the term “workers” in Section 1 and not “employees” or “servants” suggested that it was meant to be interpreted broadly.
This blog is intended to provide information to the general public and to practitioners about developments that may impact Oregon class actions.