Drivers and Overtime: What to Know About the Transportation Worker Arbitration Ban

Workers are often required by the companies they work for to sign documents containing arbitration provisions.  Companies do this because they believe arbitrators are more “defendant friendly,” and thus the arbitration provision is intended to protect the company against future litigation by the worker.  What many people do not know is that the Federal Arbitration Act contains a provision that prevents the use of arbitration provisions for transportation workers.  The FAA “exempts . . . from its coverage arbitration agreements contained in `contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1.  How the FAA defines “seamen” or “railroad employees” is for another day.  This article will discuss how courts have defined “transportation workers” and how drivers can use the FAA’s arbitration ban in litigation.  

Virtually all long-haul truck drivers are engaged in interstate commerce, as are other drivers who regularly cross state lines as part of their job duties, and thus an arbitration provision signed by such drivers would almost certainly be unenforceable under the FAA. However, courts have struggled to determine whether intrastate drivers, such as last-mile delivery drivers, couriers, food delivery drivers, drivers of ride-sharing services, and other gig-type drivers fall within the FAA’s definition of a “worker[] engaged in foreign or interstate commerce.  transportation services.

The United States Supreme Court recently discussed the FAA’s exclusion for “contracts of employment” of certain transportation workers in New Prime Inc. v. Oliveira. In that case, an independent contractor working for an interstate trucking company initiated a class action labor lawsuit in federal court against his employer. The Supreme Court reached two holdings regarding the exclusion: (1) a court should decide whether the exclusion applies; and (2) it applies to employer-employee contracts and contracts involving independent contractors. In doing so, the Court deferred to the exclusion over language in the contract, noting that “[t]he parties’ private agreement may be crystal clear and require arbitration of every question under the sun, but that does not necessarily mean the Act authorizes a court to stay litigation and send the parties to an arbitral forum.”

To decide whether the exclusion in § 1 of the FAA applies, a court must determine whether the subject contract is 1) a “contract of employment”; and 2) whether “workers are engaged in … interstate commerce”. New Prime holds “contracts of employment” include agreements between independent contractors. Further, “[w]hen Congress enacted the Arbitration Act in 1925, the term `contracts of employment’ referred to agreements to perform work.”

The First and Ninth Circuits held that “last-mile” delivery drivers who are part of continuous interstate transportation are exempt under the FAA. See Waithaka v., Inc., 966 F.3d 10, 13 (1st Cir. 2020), cert. denied, 141 S. Ct. 2794 (2021); Rittman v., Inc. 971 F.3d 904 (9th Cir. 2020), cert. denied, 141 S. Ct. 1374 (2021).

The Seventh Circuit and district courts across the country have found delivery drivers working in other industries not exempt. In Wallace v. Grubhub Holdings, Inc., 970 F.3d 798, 803 (7th Cir. 2020), the court held that food-delivery drivers for an online restaurant-food delivery service do not fall within the class of transportation workers exempted under § 1 of the FAA. Id. at 803. 

Similarly, other courts have found delivery workers not actively engaged with interstate commerce not exempt from FAA coverage. See, e.g., O’Shea v. Maplebear Inc., 508 F. Supp. 3d 279, 289 (N.D. Ill. 2020) (holding that workers for online grocery shopping service were not exempt as they were merely connected to goods by way of delivery, in that interstate movement was not a central part of their job descriptions); Bean v. ES Partners, Inc., 533 F. Supp. 3d 1226, 1236 (S.D. Fla. 2021) (finding worker for a prescription medication courier service which received medication from interstate carriers not exempt); Young v. Shipt, Inc., No. 1:20-CV-05858, 2021 WL 4439398, at *3 (N.D. Ill. Sept. 27, 2021) (holding that there was a break in the channels of commerce when workers delivered goods, presumably from other states, which had already arrived at a local retail store to consumers); Lee, 2018 WL 4961802, at *8 (holding that courier was not exempt when delivering food and other merchandise goods from local merchants to local customers). 

A court in Georgia recently found that a driver for ride-share service Lyft was not exempt from arbitration.  Hinson v. Lyft, Inc., 522 F. Supp. 3d 1254 (N.D. Ga. 2021). The same result was reached in a case in California brought by an Uber driver.  Capriole v. Uber Techs., Inc., 460 F. Supp. 3d 919 (N.D. Cal. 2020). However, in Cunningham v. Lyft, Inc., 450 F. Supp. 3d 37 (D. Mass. 2020), a Massachusetts court held that a Lyft driver could not be compelled to arbitration under the FAA transportation worker exemption.  

This is only a small sampling of the caselaw involving transportation workers and the FAA arbitration exemption.  They show that there are different interpretations of the exemption, resulting in a mixed bag of inconsistent results.  However, if you are a driver that has been denied overtime pay, you should seek the advice of an experienced overtime attorney as soon as possible to learn of your legal rights.  Josh Borsellino is experienced in handling overtime claims in federal court and in arbitrations, and can advise you of your legal rights regarding overtime pay.  Call Josh today at 817.908.9861 or email him here for a free, confidential, no-obligation consultation.  

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