{"id":2028,"date":"2019-03-15T22:30:46","date_gmt":"2019-03-15T22:30:46","guid":{"rendered":"https:\/\/quicktransportsolutions.com\/blog\/?p=2028"},"modified":"2019-03-15T22:30:48","modified_gmt":"2019-03-15T22:30:48","slug":"the-trucking-industry-grapples-with-big-news-on-both-coasts","status":"publish","type":"post","link":"https:\/\/quicktransportsolutions.com\/blog\/the-trucking-industry-grapples-with-big-news-on-both-coasts\/","title":{"rendered":"The Trucking Industry Grapples With Big News On Both Coasts"},"content":{"rendered":"\n

Rarely does a Supreme Court case grip the trucking industry like the recent case of New Prime Inc. v Oliveira<\/em><\/a>. With the conservative tilt of the Supreme Court leading many industry insiders to believe that they would rule in favor of the corporate entity in this case, the surprise when the ruling came down was widespread. <\/p>\n\n\n\n

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The basis for this case stemmed from trucking companies that\nuse owner-operator independent contractors. Trucking companies \u2013 whether for\nbetter or worse \u2013 have been able to rely on arbitration clauses within their\ncontracts to avoid lawsuits that could morph into class action status. The\nlawsuit that drove the case to the Supreme Court surrounded the contention that\nNew Prime Inc. (now known as Prime) was not paying apprentices a minimum wage. <\/p>\n\n\n\n

The original class action lawsuit was filed in 2015 by\nDominic Oliveira, who alleged that he and others within the company classified\nas independent contractors were, in fact, employees. Considering their\nclassification, this essentially means that they were likely underpaid during\nthe initial hiring periods, according to Oliveira. On the other side, Prime\npointed to the arbitration clause in the contractor agreement, stating that the\ncontractors could not sue, but must be forced into arbitration. <\/p>\n\n\n\n

By the time the case made it to the Supreme Court, the\nattorneys representing the truck drivers were basing everything on the argument\nthat the Federal Arbitration Act does not apply to contracts written up for\ntransportation sector workers. The argument then shifted to what constituted a\n\u201cworker.\u201d Is a full-time, stated employee the only \u201cworker\u201d in a company, or\ncould an independent contractor also be classified as a \u201cworker?\u201d According to\nthe First Circuit Court of Appeals, they could. <\/p>\n\n\n\n

With that ruling, Prime Inc. appealed\nto the Supreme Court, who took the case. In what surprised many, Justice Neil\nGorsuch, wrote the court opinion, which came down firmly on the side of the\ncontractors and affirmed the courts 8-0 ruling on the matter. In his opinion,\nJustice Gorsuch stated that there is a passage in the Federal Arbitration Act\nthat explicitly prevents companies from forcing arbitration when it comes to\ncertain classifications of transportation workers. <\/p>\n\n\n\n

The Meaning of a\nPhrase<\/strong><\/p>\n\n\n\n

Another sticking point in the case surrounded the phrase,\n\u201ccontract of employment,\u201d which is also contained within the Arbitration Act.\nThe question at the time was, is a contract of employment one that only applies\nto that which is created between an employee and employer or does it also refer\nto contracts that transportation companies write with independent contractors?<\/p>\n\n\n\n

Specifically, the court wanted to evaluate the meaning of\nthe term. Consider this: The Federal Arbitration Act was written in 1925.\nConsidering how much has changed since then, what was once considered a\n\u201ccontract of employment\u201d might not necessarily be established precedent. <\/p>\n\n\n\n

In fact, at the time that the Arbitration Act was written, a\n\u201ccontract of employment\u201d simply referred to an agreement between two parties\nconcerning work that needed to be done. Considering this reading of the Act\ndoes not discriminate between employees or contractors, it would seem the most\nimportant factor was the simple act of \u201cagreeing to perform work.\u201d <\/p>\n\n\n\n

While the exact definition of employment has changed since 1925, with things like employer health care, tax policy, and benefits driving a new paradigm, when the Arbitration Act was written, employment pretty much referred to work, in whatever form it might take. As such, when viewing the case through the lens of the Arbitration Act, the court unanimously determined that contractors working in specific transportation fields should not be compelled into arbitration. <\/p>\n\n\n\n

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The attorney representing Prime, of course, expressed\ndisappointment with the ruling and openly speculated whether it was right for\nthe court to stick to a precedent laid out in an act written nearly a century\nago, rather than, as he put it, evolve with \u201cthe law of business and culture.\u201d<\/p>\n\n\n\n

Reaction on Both\nSides<\/strong><\/p>\n\n\n\n

Many within the trucking industry were watching this case\nvery closely and, in some cases, getting actively involved. The American\nTrucking Associations, as an example, filed an amicus brief in favor of Prime\u2019s\nside in the case. After the decision came down, the ATA expressed their\ndisappointment with the decision as well.<\/p>\n\n\n\n

In an open letter, the ATA stated that this decision will\nlikely make it more difficult for interested parties to resolve their conflicts\nthrough arbitration which, they argue, is fair, less expensive, and a more\nefficient way to resolve conflicts, when compared to lengthy class action\nlawsuits. If trucking companies are then forced to resolve conflicts in the\ncourts, as opposed to arbitration, it could be that the increased costs could\nbe passed down through the supply chain.<\/p>\n\n\n\n

Finally, the ATA contended that in cases where the dispute\nis small-dollar and should involve a quick solution for both sides, it may go\nunresolved simply because there is no way to address it in a cost-effective\nway. In small-dollar disputes, the ATA posits that arbitration is the most\nefficient solution. <\/p>\n\n\n\n

Conversely, the Teamsters Port Division, which has been\nfighting hard in California for many years regarding what \u201cmisclassified\u201d\nstands for, called the ruling a \u201cgreat victory\u201d for transportation industry\nworkers. In a press\nrelease<\/a>, the Teamsters called misclassification and, by association forced\narbitration, \u201cegregious wage theft.\u201d The press release went on to state that\nthe Supreme Court ruling proves that employers must allow workers to have their\nday in court should the merits of the case warrant it. <\/p>\n\n\n\n

Interestingly, from independent contractors themselves, the\nreaction has been mixed. Back in August, the Western States Trucking\nAssociation came out against a California Supreme Court ruling that came down\nagainst a company the court said misclassified its employees to cut costs. The\nWSTA, which advocates on behalf of truck drivers, argued at the time that the\nruling would hamper both independent contractors and trucking companies from\ncoming to mutually beneficial employment agreements. While the WSTA has not\nreleased a statement on the current ruling, their member base is likely split\non the issue. <\/p>\n\n\n\n

The Californian situation has been especially heated in\nlight of a recent ruling by the California Labor Commission that awarded $6\nmillion to twenty-four port truck drivers the commission deemed were misclassified<\/a>.\nEven more, the commission for the first time issued individual joint liability\nagainst one of the company\u2019s employees, a general manager who oversaw the truck\ndrivers working at that company. <\/p>\n\n\n\n

This is another case that will wind its way through the\ncourt system, as the company is appealing the decision. This case simply\nhighlights the ongoing battle between the Teamsters, the Harbor Trucking\nAssociation, and the WSTA, a fight that seems to have no end in sight. Yet,\nwith the recent Supreme Court ruling on the arbitration case, might we see a\nshift in momentum when it comes to California\u2019s efforts to regulate the\ntrucking industry within its state lines? At this point, only time will tell. <\/p>\n\n\n\n

A Drawn-Out Case<\/strong><\/p>\n\n\n\n

In reality, the case the Supreme Court just ruled on is an\nissue that has been bouncing around the court system in one fashion or another\nfor many years. Many transportation companies and transportation company law\nfirms know that there is a risk that comes with requiring forced arbitration.\nNow, with the Supreme Court ruling, it has been made clear that trucking\ncompanies cannot argue that owner-operators fall outside the exemption. In the\ncase of an independent contractor, the Federal Arbitration Act simply won\u2019t be\npart of the picture. <\/p>\n\n\n\n

Yet, as some of noted, the Supreme Court\u2019s decision does not\nanswer all the questions. There are still some grey areas where motor carriers\ncan come to a more beneficial conclusion. For instance, fleets can still fall\nback on state law, where state law applies. States have varied arbitration\nlaws, so there may be some confusion when it comes to contractors working\nacross state lines and where the home carrier is based. <\/p>\n\n\n\n

Another area that the court left ambiguous was in the instance where a motor carrier has entered into a contract with an owner-operator who is not a one-person operation. If an independent contractor is operating multiple trucks, should they still be held to the exemption or compelled into arbitration? In the end, the court did not answer this question, essentially leaving it wide open for a future court case to ultimately determine. <\/p>\n\n\n\n

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So, what is the ultimate takeaway for trucking companies?\nWhenever a big court decision comes down like this, whether it be by the\nSupreme Court, in federal court, or otherwise, it is important for fleets to\nreexamine the agreements by which they bring on, not just contractors, but\nemployees as well. These types of cases serve as great reminders that trucking\ncompanies need to not only look out for their own interests, but for the\ninterests of those who complete \u201cwork\u201d for them, in whatever form that work may\ntake. <\/p>\n","protected":false},"excerpt":{"rendered":"

Rarely does a Supreme Court case grip the trucking industry like the recent case of New Prime Inc. v Oliveira. With the conservative tilt of the Supreme Court leading many industry insiders to believe that they would rule in favor of the corporate entity in this case, the surprise when the ruling came down was … Read moreThe Trucking Industry Grapples With Big News On Both Coasts<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2028","post","type-post","status-publish","format-standard","hentry","category-trucking"],"yoast_head":"\nThe Trucking Industry Grapples With Big News On Both Coasts - Quick Transport Solutions Trucking Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/quicktransportsolutions.com\/blog\/the-trucking-industry-grapples-with-big-news-on-both-coasts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Trucking Industry Grapples With Big News On Both Coasts - Quick Transport Solutions Trucking Blog\" \/>\n<meta property=\"og:description\" content=\"Rarely does a Supreme Court case grip the trucking industry like the recent case of New Prime Inc. v Oliveira. 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