The U.S. Supreme Court Limits Use of Arbitration Agreements with Independent Contractor Drivers.

On January 15, 2019, the United States Supreme Court ruled in New Prime, Inc. v. Oliveira that an interstate trucking company cannot force independent contractor drivers to arbitration based on arbitration clauses in independent contractor agreements.  The case involved drivers who entered into agreements which required them to settle disputes with New Prime through arbitration.  A driver filed a class action lawsuit against New Prime alleging it failed to pay minimum wages to its independent contractor drivers and sought to dispute the case in court, not arbitration.

The New Prime ruling acknowledged that the Federal Arbitration Act (FAA) generally requires courts to enforce private arbitration agreements.  However, an exemption in the FAA allows disputes over “contracts for employment” involving transportation workers to be resolved in court rather than arbitration.  The Court held that the FAA term “contract for employment” included agreements with independent contractor drivers as well as traditional employee drivers.

Notably, the New Prime ruling is limited in scope.  Although the ruling determined that the FAA exemption for transportation workers applies to both employees and independent contractors, it only addresses federal law and interstate operations.  The enforceability of arbitration clauses for intrastate operations continues to vary from state to state based on state law.  Contact the experienced attorneys at Chauvel & Glatt to learn how the New Prime ruling may impact your motor carrier business and independent contractor agreements.

 

This material in this article, provided by Chauvel  & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes.  For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (Photo credit: 123rf.com)

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