INDEPENDENT CONTRACTOR DRIVERS – THE GOOD, THE BAD AND THE AWFUL
T
here have been three recent legal decisions relating to the independent contractor driver model: one good, one bad and the other
decision - with the legislation that resulted from that decision - being downright awful. This article brings you up to speed on these three decisions and their impact on the independent contractor driver model.
The Good – Supershuttle DFW
This decision was issued by the National Labor Relations Board (“NLRB”) on January 25, 2019 and it is a good development for the independent contractor model. Prior to this decision, in 2014, the NLRB had evaluated whether owner-operators who drive for FedEx are independent contractors or employees. In determining that the drivers were employees of FedEx, the NLRB clarified its test for determining independent contractor status and rejected the common law right to control test, which had traditionally been used by the NLRB in making status determinations. In doing so, the NLRB made it more difficult for businesses to prove that their workers are independent contractors under the National Labor Relations Act. With its January 25 decision, the NLRB returned to its traditional common law test, which is a good development.
The Bad – New Prime
This decision by the United States Supreme Court was issued on January 15, 2019. In this case an independent
contractor driver had signed a contract with the carrier which required that all disputes between the parties be arbitrated and not brought in court. Contrary to this provision, the driver brought a class action lawsuit against the carrier in Federal Court. The carrier sought to compel arbitration under the contract and the Federal Arbitration Act (FAA). The FAA contains an exempt from its coverage for “contracts of employment” of workers who are engaged in interstate commerce. The driver argued that his contract with the carrier was exempt from the FAA because it was a “contract of employment.”
The Court agreed with the driver and, in doing so, considered the meaning of the phrase “contract of employment” at the time the FAA was enacted in 1925. The Court determined that the word “employment” in the exemption was, at that time, just a term which included any kind of work performed by an individual. Under this ruling, carriers cannot now force independent contractor drivers to arbitrate their disputes on an individual basis under the FAA. This is bad news for the trucking industry and a negative development for the independent contractor driver model.
The Awful - Dynamex Operations West
A group of delivery drivers for Dynamex brought a class action lawsuit against the company alleging they were being misclassified as independent contractors. The Supreme Court of California determined that the drivers were employees of Dynamex for purposes of California wage orders, which impose obligations relating to minimum wages, maximum hours, and basic working conditions.
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