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Port Truck Driver Arbitration Agreements Found to be Exempt from FAA Coverage and Unenforceable

Port Truck Driver Arbitration Agreements Found to be Exempt from FAA Coverage and Unenforceable

photo credit: Alphast via photopin cc

By Victoria Ni
Managing Attorney & 
Leah Nicholls
Staff Attorney

More good news for port truck drivers fighting for their rights and fighting against arbitration clauses: another group of drivers has succeeded in striking down their company’s alleged arbitration clause. This preserves Labor Commissioner findings that they were employees, and not independent contractors, and an award of nearly $900,000 in back wages in favor of the drivers.

The other good news: the usually all-powerful Federal Arbitration Act didn’t apply.

Yesterday, a California state court held that the drivers’ wage claims could not be sent to arbitration, despite an arbitration clause in written contracts signed by the drivers. It agreed with our briefing that said the FAA did not apply to these contracts because the drivers were workers engaged in foreign or interstate commerce. It turns out that the FAA has an express carve-out for transportation workers, and state law—which was not preempted by the FAA—prohibited the drivers’ wage claims from being arbitrated. The court also said the arbitration clause was so unfair it was unconscionable.

So, the court dismissed the lawsuit Total Transportation Services, Inc. had brought against its own drivers to force them into arbitration.

Yesterday’s arbitration victory is fantastic news for these drivers, and it sends a strong message to trucking companies trying to avoid labor laws by calling their employees “independent contractors” and forcing them into arbitration processes when they complain.

Had the case gone the other way—if the arbitration agreements were enforced—the drivers would have been required to fight for their wage rights in a secret proceeding before an arbitrator paid by the hour by the disputing parties. And it wouldn’t have been just any arbitration.

Because TTSI considers the drivers to be independent contractors, the arbitration clause would have sent the claims to commercial arbitration (meant for business disputes), which would have required the drivers to pay much higher up-front fees—in the thousands of dollars—than individuals are normally required to pay. Most, if not all, of the drivers would have had to give up at that point, because they just couldn’t afford the regular arbitration fees, never mind the higher commercial fees.

Plus, the drivers’ hard-fought victories before the California Labor Commissioner would probably have been wiped out. Earlier this year, the Labor Commissioner held hearings and agreed with the drivers’ claims, finding they had been misclassified as independent contractors and that they were entitled to back wages. (TTSI has appealed those awards, but there’s every reason to think the drivers’ claims remain strong.)

Fortunately, the drivers’ arguments challenging the arbitration clause prevailed, and more workers will retain their rights.