Cert petition: Are "contractor" truck drivers covered by Federal Arbitration Act?


It seems a bit of a strange twist that the 1st Circuit held that an independent contractor truck driver's agreement with his trucking firm is a "contract of employment." Oliveira v. New Prime, Inc. (1st Cir 05/12/2017) [Opinion]. So the employer has filed a certiorari petition at the US Supreme Court. New Prime, Inc. v. Oliveira [Petition] [Briefs] The formal statement of the issues:

"(1) Whether a dispute over applicability of the Federal Arbitration Act’s Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause; and (2) whether the FAA’s Section 1 exemption, which applies on its face only to 'contracts of employment,' is inapplicable to independent contractor agreements."

We usually draw a firm line between "employees" and "independent contractors."

This matters big time because the Federal Arbitration Act does not apply to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." So, if the driver has a "contract of employment," then the FAA does not apply to that contract. And if that contract has an arbitration agreement, then the FAA does not require that it be enforced.

All of this is important because the driver in this case went ahead and filed a suit in court – and a putative class-action suit at that. The trucking firm moved to compel arbitration – citing an arbitration clause in his contract – and the 1st Circuit held that arbitration could not be compelled because the FAA did not apply.

Using FAA-era dictionaries, the 1st Circuit said that "contracts of employment" contained in FAA § 1 means simply "agreements to do work." The court said:

"[W]e hold that a transportation-worker agreement that establishes or purports to establish an independent-contractor relationship is a contract of employment under § 1. We emphasize that our holding is limited: It applies only when arbitration is sought under the FAA, and it has no impact on other avenues (such as state law) by which a party may compel arbitration."

The 1st Circuit also held that the district court, and not the arbitrator, must decide whether the § 1 exemption applies. This is true even where the parties have delegated questions of arbitrability to the arbitrator.

There's a split of authority as to both issues involved in this case, so this might be one for the Supreme Court to take up. We'll just wait and see.

[For a list of current employment law cases, see Supreme Court Watch]