Federal Court in Florida Rules that Federal Arbitration Act Exclusion Does Not Apply to Uber Drivers

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On June 1, 2021 the Southern District of Florida granted the motion by Uber Technologies, Inc. (“Uber”) to compel arbitration, finding that the company’s drivers did not engage in sufficient interstate commerce to meet the interstate commerce exclusion in the Federal Arbitration Act (FAA).

Plaintiffs Kathleen Short and Harold White brought a class action against Uber alleging that the company’s policy of classifying its drivers as independent contractors violates the Fair Labor Standards Act and the Florida Minimum Wage Act because the company failed to pay drivers the minimum wage. Uber sought to enforce its arbitration agreement which unambiguously required plaintiffs to pursue any potential claims in an individual arbitration.

The plaintiffs attempted to avoid the agreement by arguing that they were outside the scope of the FAA. Section 1 of the FAA excludes “contracts of Employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from the FAA’s requirements. The Supreme Court has previously held in Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), that the “interstate commerce” exclusion applies only to transportations workers.

Judge Aileen M. Cannon noted while the Eleventh Circuit had not weighed in on whether rideshare drivers qualify for the Section 1 exclusion, it has consistently held that the law applies only to workers who “actually engage in the transportation of goods in interstate commerce” and are “employed in the transportation industry.” The court explained that to determine whether the transportation worker exemption applies, courts have analyzed whether the class of workers as a whole engaged in interstate commerce, rather than looking at individual workers.

Judge Cannon rejected the plaintiffs’ exclusion argument based on Uber’s evidence that only 12.8% of the drivers made any interstate trips in 2020, and among those drivers, interstate trips amounted to fewer than 2% of their total number of trips. With similar cases being litigated in California and in the Third Circuit, the applicability of the FAA’s interstate commerce exclusion to rideshare drivers continues to be an important issue for rideshare companies.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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