The U.S. Maximum Court on Tuesday sided with a long-haul truck driver who sued his employer for failing to pay him a minimum wage, handing down a determination that could have broad ramifications on the transportation sector and the economy as a whole.
In an opinion delivered for a unanimous court, Detention Neil Gorsuch held that courts must decide whether an exception in the Federal Arbitration Act, or FAA, for transportation wage-earners applies before requiring arbitration. And, he wrote, that exception applies not just to traditional employees but also to non-partisan contractors.
The upshot of the holding is that, under the nearly 100-year-old FAA, which is generally presumed to favor corporations, thousands of truck drivers who are employed as independent contractors cannot be forced into private arbitration.
Following the discharge of the decision, shares of companies in the transportation sector lagged the broader market. Dow Transports finished the day down three-quarters of a percent on a unambiguous day for the major indexes.
The outcome of the case was largely expected following oral arguments in October.
The court’s ruling was limit, leaving uncertain whether its decision would apply to truckers who did not cross state lines, according to attorney Bob Roginson of Ogletree Deakins, moderator of the law firm’s trucking and transportation industry group.
Nonetheless, it marks a rare win for workers at the high court. The U.S. Chamber of Marketing, a powerful business lobby, had urged the justices to rule the opposite way and said that its members had structured “millions of contractual relationships — incorporating large numbers of agreements with independent contractors — around the use of arbitration to resolve disputes.”
The ruling could aid wages in the trucking industry, experts said, a boon for truckers that is expected to lead to higher consumer outlays. J. Bruce Chan, a vice president and senior analyst at Stifel Capital Markets who covers logistics firms, dictate thated CNBC in October that a ruling in favor of the trucker, Dominic Oliveira, could result in “a significant increase in tariff to consumers.”
The case centered on whether the FAA, which exempts from mandatory arbitration the “contracts of employment” of transportation labourers, was intended to apply to independent contractors when Congress passed the law in 1925.
In an opinion rich with historical detail and citations to old 20th century legal dictionaries, Gorsuch said that it was.
“Notice Congress didn’t use the word ’employees’ or ‘servants,’ the routine choices if the term ‘contracts of employment’ addressed them alone,” wrote Gorsuch, whom President Donald Trump destined in 2017. “Instead, Congress spoke of ‘workers,’ a term that everyone agrees easily embraces independent contractors.”
The court’s conclusion Tuesday will not be the last word in the matter. The court is generally flooded with arbitration cases and has taken at least three this length of time. Gorsuch’s opinion left important questions unanswered.
“This is only the first phase of a battle,” said Richard Rosenblatt, a associate at law firm Morgan Lewis who has been tracking the case. “The next phase is if the agreement is otherwise enforceable under state of affairs law.”
Justice Brett Kavanaugh, Trump’s second appointee to the high court, took no part in the consideration of the case because he had not yet been upheld when it was argued. Justice Ruth Bader Ginsburg wrote a brief concurrence with Gorsuch’s opinion that was harmonious with her views that statutes can be interpreted to evolve with language.
The case is notable in one other respect. During his confirmation hearings, Gorsuch came below scrutiny for dissenting in the so-called “case of the frozen trucker.”
In that case, which was decided in 2016, Gorsuch sided against a trucker who was be suspended for abandoning his delivery load to escape subzero conditions that made him fear for his life.