In an important decision for transportation workers, the U.S. First Circuit Court of Appeals has held that a trucking company cannot use the Federal Arbitration Act (FAA) to force its truckers to bring their claims against the company in arbitration. As we have previously discussed, companies often force workers to sign arbitration agreements because the arbitration system is stacked in those companies’ favor. When workers forced to sign one of these arbitration agreements file their claims in court, instead of in arbitration, companies often rely on the FAA to get the cases thrown out of court and into arbitration. But in this case, the First Circuit held that the FAA did not apply.
This case involved a class of truck drivers who sued New Prime, Inc. for minimum wage violations. New Prime allegedly engaged in a practice of encouraging truck drivers to become “independent contractors” instead of employees of the company. One of the issues in this case is whether the truck drivers were, actually, independent contractors or were employees. If they were employees, the federal Fair Labor Standards Act (FLSA) would entitle them to minimum wage; but if they were independent contractors, FLSA would not cover them.
The FAA does not apply in cases involving transportation workers and, thus, companies cannot use the FAA to force cases brought by transportation workers into arbitration. New Prime argued that the exemption for transportation workers only applies to cases involving employees and does not apply to cases involving independent contractors. New Prime also argued that an arbitrator, instead of a court, should decide whether the FAA applied to this case. The First Circuited rejected both of New Prime’s arguments.