Last week, employees received a rare victory that punches a sizable hole in previous laws that supported allowing arbitration in place of litigation. Recently, a unanimous Supreme Court determined that the regulation does not apply to those who work in transportation. For the last decade, employers have basked in victories as the U.S. Supreme Court bolstered arbitration (via agreement) as an alternative to litigation. Arbitration has been particularly helpful to avoid class-action lawsuits. Just last year, the Supreme Court held that agreements under the Federal Arbitration Act (FAA) can be utilized to waive employees’ rights to bring or participate in class actions.
Because the FAA excludes “contracts of employment of seamen, railroad employees, or any other [like] class of workers engaged in foreign or interstate commerce,” the Supreme Court held Congress excluded transportation workers as well. As a result, transportation workers cannot be barred from filing or engaging in class actions via the FAA. An important clarification is that the Supreme Court also determined it makes no difference whether the individual at issue is an employee or independent contractor. Anyone who “works” in transportation is employed in transportation.
The result of this decision? There will likely be much litigation over what is considered a “transportation” worker under the FAA as workers try to bring class actions and avoid arbitration by claiming to be transportation workers (now deemed exempt from the FAA and class-action waivers under the FAA). Potential candidates for “transportation worker” disputes will be (a) workers whose jobs include frequent travel as a regular part of their responsibilities; and (b) anyone working for a business that primarily engages in transporting goods or services – regardless of his or her specific job.
