Skip to main content

Breaking: United States Supreme Court Holds Independent Contractors in Transportation Industry May NOT Be Forced Into Mandatory Arbitration


Back in October, the United States Supreme Court heard oral arguments in New Prime, Inc. v. Oliveira.  The case, which came up on appeal from the First Circuit Court of Appeals, raised two primary questions for the Court to consider:  1) Whether a court should determine whether the Federal Arbitration Act's Section 1 exclusion for disputes involving "contracts of employment" of certain transportation workers applies before sending a case to arbitration (or if the matter should instead go straight to an arbitrator to decide the question of arbitrability), and 2) Whether the transportation worker, Dominic Oliveira ("Oliveira"), had a "contract of employment" that fell within Section 1's exception.

At October's oral arguments, I made note of the Justices giving counsel for New Prime, Inc. ("New Prime") a rather rough go of it, based upon the tenor of their questions.  On the other hand, the questions aimed at counsel for Oliveira seemed to suggest that the Court found his arguments more compelling.  I looked into my crystal ball and thought that a 6 - 3 or 7 - 2 ruling in favor of Oliveira was likely, based upon how oral arguments played out.  

Well, it turns out I was close.  On Tuesday, Justice Neil Gorsuch delivered the opinion of the Court:  An 8 - 0 ruling affirming judgment from the lower court in favor of Oliveira.  (Justice Brett Kavanaugh did not take part in the opinion.)  In the majority opinion, Justice Gorsuch wrote that courts, not arbitrators, should decide whether an agreement falls under the FAA exception as courts are better positioned to determine whether the FAA covers the agreement in question before compelling arbitration. As for Oliveira and his independent contractor status, Justice Gorsuch addressed whether his work agreement with New Prime counted as a "contract of employment".  To answer the question, Justice Gorsuch noted it was imperative to look at when when the FAA was originally adopted, in 1925, to determine what "contract of employment" meant then.  As the opinion points out, "contract of employment" was generally understood to have a broad meaning, based in part upon caselaw and statutory text from that time.  Consequently, the Court found it was reasonable to hold that "contract of employment" would include independent contractors as well as employees.

Readers might be surprised to see the Supreme Court rule in such a large number against the enforceability of an arbitration agreement here.  We have previously seen the Supreme Court tend to be quite liberal if you will, in regard to the enforcement of arbitration agreements in the workplace.  Nevertheless, the Court's holding here that contracts of employees and independent contractors with interstate transportation companies are excluded from the FAA's mandatory arbitration provision is noteworthy.  This is a major victory for employees and a dissapointing outcome for employers.


For a copy of the Supreme Court's Opinion:  https://www.supremecourt.gov/opinions/18pdf/17-340_o7kq.pdf

Comments

Post a Comment

Popular posts from this blog

NLRB: Discussion Among Employees About Tip Pooling is Protected Concerted Activity

  This Advice Memorandum from the National Labor Relations Board’s Associate General Counsel, Jayme Sophir, addressed whether employees which discussed and complained about tip pooling at work constituted protected concerted activity. In relevant part, an employer in New York operated a chain of steakhouses.  While tip pooling was in place at these steakhouses, some of the employees objected to it on the grounds that it was not transparent and improperly divided tips among the workers.  Employees were told not to complain or talk to each other about the tip pool and were told that doing so would endanger their jobs.  Despite the employer later attempting to provide some clarity as to how the tips were being divided, rancor still existed among some employees.  At one point, the employees were told by a general manager that some employees that had been talking about the tip pool were “cleared out” and the employer would continue to do so. In the Advice Memorandum, it was noted that emplo
Post a Comment
Read more

What I’ve Been Reading This Week

A few years ago, I remember when the “Fight for $15” movement was taking off around the country.  Lo and behold, it appears that a $15/hour minimum wage is not the stopping point, which should be no surprise.  As the below article notes, New York is aggressively moving to ramp up hourly wage rates even higher.  While all the  below articles are worth a read, I called particular attention to that one. As always, below are a couple article that caught my eye this week. Disney World Workers Reject Latest Contract Offer Late last week, it was announced that workers at Disney World had rejected the most recent contract offer from the company, calling on their employer to do better.  As Brooks Barnes at The New York Times writes, the unions that represent about 32,000 workers at Disney World reported their members resoundingly rejected the 5 year contract offer which would have seen workers receive a 10% raise and retroactive increased back pay.  While Disney’s offer would have increased pa
Post a Comment
Read more

Utah Non-Compete Bill Falters in House

Last month, a non-compete bill sponsored by Representative Brian Greene (Republican from Pleasant Grove) & up for vote in the Utah House failed to make it through the Legislature.  The bill sought to ban enforcement of non-competes if they came after a worker was already employed, given no compensation (such as a bonus or promotion) for signing the non-compete, and laid off within six months.  However, by a 22 - 49 vote, the bill was resoundingly defeated after some business groups lobbied to kill the non-compete bill.  One group in particular, The Free Enterprise Utah coalition, argued that the Utah State Legislature should hold off on any changes to non compete laws in the state until a survey about non competes was done among Utah businesses.  Representative Greene had countered this claim and argued that a survey was not needed to show that the current non compete laws in the states allowed many businesses, including some small high tech companies in the state, to per
Post a Comment
Read more