A decision handed down Jan. 15 by the U.S Supreme Court will force radical change in how trucking companies deal with independent contractor drivers.
The decision strikes down clauses in interstate owner-operator contracts requiring that any disputes over compensation and working conditions go to arbitration rather than to court.
Class action lawsuits are an important weapon in the arsenal of those who view independent contractors as misclassified employees.
Profiting from the ruling are tort lawyers seeking a target-rich environment and the Teamsters union, which for a long time has been attempting to organize owner-operators, including package delivery and port drayage drivers.
The High Court decision firmly establishes that all truck drivers involved in interstate and foreign commerce are not covered by the Federal Arbitration Act (FAA), the law which allows businesses to adopt contractual language requiring arbitration for disputes involving such things as wages and working conditions.
Passed in 1925, the law specifically excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from containing arbitration clauses.
Up until now, truck fleets using owner-operators held they were not “workers” or employees, but in fact were independent businesses that contracted to perform services with other companies.
In its 8-0 decision (Justice Brett Cavanaugh had not been confirmed when oral arguments were heard last fall), the High Court’s decision written by Justice Neil Gorsuch determined that there is no significant difference between the words “employee” and “worker” under the law, and thus no distinction exists in this context between people who work as independent contractors and those who are termed employees.
The case at issue involved a former owner-operator for the national temperature-controlled carrier New Prime Inc., which is more commonly known as Prime Inc. the name you see emblazoned on the sides of its trailers on the road.
Lawyers agree that the decision creates a sea change in trucking by allowing owner-operator drivers to resort to the courts in challenging their independent contrtator classification, instead of being forced into arbitration under contractual language.
“New Prime has significant immediate ramifications for transportation industry employers, which are now unlikely to be able to require many categories of individuals to arbitrate employment disputes,” according to attorneys Thomas Gies, Trina Fairley Barlow and Christine Hawes of the law firm of Crowell & Moring.
Attorneys Alexander Chemers and Robert Roginson of the Ogletree Deakins law firm say, “Although the Supreme Court ruled in favor of the worker, it did not address a key issue, namely, who qualifies as a transportation worker ‘engaged in foreign or interstate commerce’ subject to the FAA’s exclusion.”
The Supreme Court in New Prime also decided that whether the FAA exempts certain workers is a question for the courts to decide, not arbitrators. This is confusing because just a week earlier the court seemingly held the opposite to be true.
In that case involving the Henry Schein, Inc. dental supply company, a unanimous decision held that nothing in the FAA empowers a court to make a determination as to the merits of whether a dispute should be arbitrated, and such a decision should be left to the arbitrator instead of a court.
Attorneys for owner-operator drivers in California, Illinois and other states earlier had filed class action lawsuits that also argue the FAA arbitration exemption applies to them because they are engaged in interstate transportation.
In spite of the fact that owner-operators have played a major role in the trucking industry since it first began in the early 20th Century, the recent battle over their independent contractor status has been waged for more than 20 years.
Last year, the California Supreme Court adopted a strict new legal definition stating that no one can be an independent contractor if they are in the same line of work as the company they are contracting to – which of course is the case with owner-operators in the trucking business. (AA, 5-31-18, P. 1).
As for the driver in the New Prime case, Dominic Oliveira, this does not end his epic court journey. His case now goes back to the lower court where it was originally brought to be judged on its merits.
Oliveira claims he was really an employee during his time as an owner-operator and is owed unpaid minimum wages for all hours he worked. If the court finds in his favor, the decision also would set a precedent for other Prime owner-operators.
