Supreme Court Rules Truck Owner-Operators Can't Be Forced into Arbitration
(January 23, 2019)
- Trucking companies that use owner-operator independent contractors may not be able to rely on arbitration clauses to avoid lawsuits from those drivers in the wake of a new U.S. Supreme Court decision. The court ruled Jan. 15 that Missouri-based trucking company New Prime Inc. (known as Prime) cannot force arbitration in a class action lawsuit alleging it failed to pay independent contractor truck-driver apprentices minimum wage.
“Going back now probably a decade, Scopelitis has been advising clients that this is a risk they run in requiring arbitration with their owner-operators,” said Braden Core, partner with transportation law firm Scopelitis, Garvin, Light, Hanson & Feary. “What we now know is that you’re not even going to get to argue that your owner-operators fall outside the exemption.”
However, he said, the court’s decision does leave a few issues open:
- Carriers may still be able to use state law. “That’s good news, although it raises a number of its own questions, because state law varies,” Core said. “Some states have better arbitration laws than others. So, every carrier is going to have to look at their agreements and ask themselves, ‘How do I shake out under state law?’”
- Arbitration agreements may still be an option for contracts with carriers that are not a one-man/one-truck driving operation. During the oral argument, several justices probed whether an owner-operator who did not personally perform services or who operated multiple trucks would be subject to the exemption. The court did not address these issues in its opinion, arguably leaving them open for future litigation.
Core’s advice to fleets? “Any time there’s an opinion like this that affects the industry, it is a good idea for a carrier to take the agreement off the shelf, dust it off and revisit it.”