Category Archives: Transportation

UPDATE: Supreme Court Rules For Workers On FAA “Transportation” Exemption

Contributed by Brian Wacker, January 15, 2019 

Last month, this blog discussed New Prime, Inc. v. Oliveira, a then-pending case before the Supreme Court that presented the question of whether arbitration agreements between trucking companies and independent contractor drivers fall within the “transportation” exemption to the Federal Arbitration Act (“FAA”).   

This morning, the Court unanimously ruled in favor of Mr. Oliveira, affirming the First Circuit and holding that his independent contractor agreement with New Prime is a “contract of employment” under the FAA.  The Court disregarded the characterization of his relationship with New Prime as an independent contractor (as opposed to an “employee”) and found that the FAA’s exemption for “contracts of employment” refers to any “agreements to perform work.” Therefore, Mr. Oliveira’s agreement fell within the FAA’s exemption and his claims were not properly subject to compelled arbitration.  

This is a significant victory for workers, especially considering the unanimity of the Court’s decision, authored by one of its more conservative jurists, Justice Gorsuch. Employers with independent contractors in the transportation field should take note: existing arbitration provisions in independent contractor agreements can no longer be used to shield businesses from the risks, expenses and uncertainty of litigation in court.

Are Independent Contractor Transportation Workers Exempt from the Federal Arbitration Act?

Contributed by Brian Wacker, December 10, 2018

The Supreme Court recently heard arguments on an issue which will have lasting implications on the arbitrability of claims between employers and certain independent contractors. Where the Court lands will have significant impact on employers moving forward, not only with regard to the form of contracts employers offer, but also with regard to how they classify workers in the transportation field.

Currently, the Federal Arbitration Act (the “FAA”) authorizes transportation employers to include mandatory arbitration provisions in employment contracts, which can require employees to arbitrate workplace disputes in lieu of going to court, and limit them to bringing those claims individually. This is obviously a strong tool for employers seeking to minimize the uncertainty and costs of litigation.

SupremeCourtBuilding

Supreme Court Building

However, as employers with workers engaged in transportation should know, an exception is made in Section 1 of the FAA, exempting “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. §1. This has become known as the “transportation” exemption. Historically, Congress included this exemption, in part, because transportation workers were subject to separate federal dispute resolutions statutes already in effect.

In New Prime, Inc. v. Oliveira, Sup. Ct. Case. No. 17-340, the Court considered the “transportation” exemption in the FAA – specifically two issues: (1) whether disputes over its applicability should be resolved by an arbitrator or a judge and (2) whether the exemption applies to independent contractors as well as employees.

The scope of the “transportation” exemption has been wrangled over for years, culminating in the 2001 landmark decision in Circuit City Stores, Inc. v. Adams, where the Court plainly read the exemption, holding that it did not apply to any workers outside of the delineated transportation industries. In other words, non-transportation workers could no longer try to seek the benefit of the exemption.

Despite this precedent, workers have continued to try to expand its application with New Prime being just the latest example – this time to independent contractors working in the transportation field. Following submissions and several amicus briefs in support of both sides, the issue and positions of the parties were clear. When defining the exemption’s scope, it uses the term “contracts of employment.” New Prime, the Petitioner, has asked the Court to interpret this term narrowly, arguing it should mean only those contracts that establish a common-law employment relationship. Oliveira, the Respondent, argued the term should refer to all agreements to perform work, regardless of form, which would necessarily include independent contract agreements.

The Court heard oral argument on October 3, 2018. Because the case was submitted prior to new Associate Justice Kavanaugh’s confirmation, the case was only heard by eight justices. So if the justices split along ideological lines 4-4, Oliveira will prevail and the First Circuit’s ruling that the independent-contractor agreement at issue was a “contract of employment” for purposes of the exemption.

The Court is not expected to rule until early 2019. This blog will update as soon as the Court’s opinion is issued.

The Impact of Local Minimum Wage and Paid Sick Leave Ordinances on the Transportation Industry

Contributed by Michael Wong, January 5, 2018

Over the past few years, cities, counties and local municipalities have been enacting laws and ordinances increasing the minimum wage and requiring paid sick leave for employees. While there have been growing pains with how these apply to normal hourly non-exempt employees and tipped servers, do these apply to motor carriers and employees who are truck drivers?  This can be the most frustrating legal response of all, “it depends.”

In most cases, minimum wage laws enacted by states follow the Fair Labor Standard Act (“FLSA”) and provide exemptions for motor carriers.  Indeed, under Section 12(b)(1) of the FLSA, employees whose duties, wholly or in part, affect the safety of operation of a motor vehicle and are involved in interstate commerce are exempt from being paid overtime. Whether a municipality’s minimum wage ordinance applies, depends on the language and rules of the ordinance. For example, the rules of the Cook County, Illinois minimum wage specifically state that a regulated motor carrier subject to subsection 3(d)(7) of the Illinois Minimum Wage Law is not a “Covered Employer” that would be required to pay covered employees the Chicago or Cook County minimum wage. Similarly, the rules of the City of Chicago minimum wage states that individuals employed for a motor carrier who are subject to the Department of Transportation regulation are not subject to the Chicago minimum wage.

However, paid sick leave laws and ordinances are different.  Neither the Cook County, Illinois earned sick leave ordinance or City of Chicago earned sick leave ordinance have the same exclusion for motor carriers or truck drivers.  While neither expressly states that motor carriers are required to provide paid sick leave to employees who are truck drivers, they also do not state that motor carriers or truck drivers are exempt.  Due to the plain language exempting motor carriers and truck drivers from the minimum wage ordinances, there is a very strong argument that motor carriers are required to provide their employees who are truck drivers with paid sick leave.

Indeed, this interpretation is not unusual within the growing trend of states, cities and local municipalities expanding employee rights – including those of truck drivers. Currently there are 8 states and 30 cities and municipalities that have paid sick leave laws which include:  Illinois (local), Washington (state and local), California (state and local), Arizona (state and local), Oregon (state and local), Minnesota (local), Vermont (state), Massachusetts (state and local), Pennsylvania (local), New Jersey (local), New York (local), Connecticut (state) and Washington, D.C. (local).

Bottom line, the different paid sick leave laws do not address or expressly exempt motor carriers or truck drivers from being subject to the law or ordinance. By not addressing or expressly exempting motor carriers and their employees, these laws are creating significant exposure for motor carriers that fail to make changes by providing employees who are truck drivers with the ability to earn paid sick leave or considering how those employees are being compensated. Certainly, with the patchwork of laws and nuances in each jurisdiction, it can be extremely frustrating and difficult to try and implement a globally compliant policy.  Thus, special attention must be taken when crafting such policies and review by experienced counsel should be part of the process.  Moreover, motor carriers utilizing truck drivers who are independent contractors or owner/operators should take particular pause to consider the increased liability from misclassification claims and the potential damages under the paid sick leave laws, in addition to any applicable minimum wage law or ordinance.

SmithAmundsen Transportation Alert: FMCSA Withdraws Proposed Sleep Apnea Rulemaking

Contributed by Peter Henry, August 8, 2017

sleep apneaThe Federal Motor Carrier Safety Administration (FMCSA) and the Federal Railroad Administration (FRA) have withdrawn the proposed rulemaking aimed at identifying and treating obstructive sleep apnea in workers in safety sensitive positions. The withdrawal, officially published on August 8, 2017, states that both agencies believe the programs currently in place are the appropriate avenues to address the safety hazards presented by obstructive sleep apnea.

Although it will not be issuing additional rules regarding sleep apnea, the FMCSA will consider updating the January 2015 “Bulletin to Medical Examiners and Training Organizations Regarding Obstructive Sleep Apnea.” That update would be based on the August 2016 recommendations of the FMCSA Medical Review Board, which proposed detailed, objective guidelines for the identification of drivers at risk for obstructive sleep apnea. Nonetheless, the FMCSA is no longer seeking to issue further regulations regarding drivers with sleep apnea.

Thus, for the time being, there is no change in the regulations relating to sleep apnea, and whether a driver is evaluated for sleep apnea is left in the discretion of the examiner. A driver may have “no established medical history or clinical diagnosis of a respiratory dysfunction likely to interfere with his/her ability to control and drive a commercial motor vehicle safely.” The regulations currently instruct the examiner to refer a driver to a specialist for further evaluation and therapy if he or she detects a respiratory dysfunction likely to interfere with the driver’s ability to safely control and drive a commercial motor vehicle.