Ruling that not all arbitration clauses within contracts between transportation fleets and independent contractors are binding, the U.S. Supreme Court recently decided in favor of owner-operator Dominic Oliveira in a class-action lawsuit against Springfield, Missouri based New Prime, Inc. which has contracts with more than 5,000 independent drivers. In a unanimous 8-0 decision, the Supreme Court said that New Prime could not force Oliveira to settle disputes through arbitration despite an agreement between the company and its drivers which included an arbitration clause.
Oliveira argued that New Prime did not pay its drivers lawful wages even though they were essentially treated as employees. According to the 1926 Federal Arbitration Act, courts must enforce arbitration clauses in contracts between businesses and employees. A major exception to this law, however, is that it does not cover transportation workers, and this is exactly what the court focused on in opinions written by Justices Neil Gorsuch and Ruth Bader Ginsburg.
When Oliveira began employment with New Prime, he was expected to fulfill both an apprenticeship and a term as a “trainee” where he was paid only about $4 an hour. When he completed his training, he was designated as a contractor and required to lease his truck from New Prime, buy his own equipment and purchase his own gas. Oliveira claimed that during some months his paycheck from New Prime would enter negative numbers because of deducted costs. Oliveira sued, arguing he was, in fact, an employee, due all the benefits of that status including having his complaints heard in court.
In the majority opinion, Gorsuch argued that “all work was treated as employment” and the law should recognize work agreements between employees and contractors the same way. Looking to the future, especially as the U.S. economy transitions, Ginsburg focused on laying the groundwork for future litigation, saying that Congress needs to “design legislation to govern changing times and circumstances.”
The decision has been hailed by both drivers and independent workers in other trades as a victory, allowing them to settle disputes in court instead of through arbitration. Most experts believe that workers are at a disadvantage when their cases go to arbitration. Another result of the ruling may be that America’s courts will at some point need to decide whether truck drivers deserve minimum wage pay for non-driving duties. In October, an Arkansas Federal Court ruled that a driver should be paid for every hour he spends in his truck while not sleeping, up to 16 hours a day.
