Last year, the US Supreme Court ruled the Federal Arbitration Act did not apply to transportation workers engaged in interstate commerce. The FAA specifically exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” the Supreme Court ruled.
Now, delivery drivers’ independent contractor misclassification cases — and companies’ desire to enforce arbitration agreements — hinge on that ruling.
Interstate commerce. What entails interstate commerce? In May 2019, a federal appeals court in Washington state determined Amazon delivery drivers engage in interstate commerce despite not actually crossing state lines in the course of their deliveries. The court reasoned that because the workers delivered goods shipped from around the US to the ultimate consumer, the transportation worker exemption did apply, even if the workers never crossed state lines. Further, the court determined a strike by the workers would interrupt interstate commerce. Thus, Amazon could not compel individual arbitration in an the drivers’ independent contractor misclassification lawsuit filed against it.
The First Circuit earlier this month affirmed another district court’s similar ruling, Law Street Media reported. The lower court held that “the exemption encompasses the contracts of transportation workers who transport goods or people within the flow of interstate commerce, not simply those who physically cross state lines in the course of their work.”
Mixed bag. But the issue is far from settled. The New Jersey Supreme Court ruled that even if arbitration can’t be enforced under the FAA, is might be under state law, attorney Todd Lebowitz reports. If the FAA does not apply, he writes, whether the arbitration clause and class action waiver can be enforced will depend on state law.