THIRD CIRCUIT SAYS UBER DRIVERS MAY BE EXEMPT FROM ARBITRATION AGREEMENTS IF THEY CAN SHOW THEY ARE ENGAGED IN INTERSTATE COMMERCE

Employment Arbitration Agreements typically force employees to resolve legal disputes with their employer through an opaque process controlled by a privately retained arbitrator, rather than publicly through our relatively transparent jury-based court system. These privately retained arbitrators often favor the large corporation employers who provide them repeat business as opposed to the typical “one and done” worker. Further, arbitrators are not bound by the same rules, legal precedents, and public oversight that judges are when making their decisions. Usually the only issue of arbitration that can be resolved by our courts is the “gateway dispute about whether the parties are bound by a given arbitration clause” Howsam v. Dean Witter Reynold, 537 U.S. 79, 84 (2002), that is, whether the parties entered into a valid and binding arbitration agreement.

In a limited response to the unfairness forced arbitration agreements impose on employees, Congress included a provision in the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16 exempting certain employees from its authority. Section 1 of the FAA provides that “nothing herein shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign interstate commerce.Id. Our courts often hold that transportation workers fall into the “class of workers engaged in foreign interstate commerce” that are excluded from FAA coverage, and thus are not bound by arbitration agreements. However, recently, in Singh v Uber Techs. Inc., 2019 U.S. App. the Third Circuit was asked to determine the limits of this exemption.

In Singh, an Uber driver in New Jersey brought a class action lawsuit in District Court against Uber for misclassifying their drivers as independent contractors as opposed to employees claiming such a misclassification deprives the drivers from receiving overtime pay. Based on an arbitration agreement between the parties, Uber moved the District Court to dismiss the case under the FAA and have Singh resolve the matter by bringing it to an arbitrator. Singh argued that the District Court did not have the authority to compel arbitration under the FAA as he was a transportation worker excluded from FAA coverage as “any other class of worker engaged in interstate foreign commerce” under Section 1. Uber argued, and the District Court agreed, that only transportation workers that transport goods, not those who transport passengers, are excluded by the residual clause of Section 1 in the FAA. Id. at *13. (“a court must be satisfied that this clause does not apply before making an order that the parties proceed to arbitration”).

On appeal, the Third Circuit reversed the District Court ruling finding Uber drivers can belong to a class of workers engaged in interstate commerce as the residual clause of Section 1 in the FAA does not limit itself to transportation workers who transport goods. Id. at *15. So long as the transportation work Uber drivers are engaged in involves interstate commerce or involves work closely related to interstate commerce, then regardless of whether the drivers transport goods or transport people they will be exempt from FAA coverage. Id. at *16. However, the Third Circuit did not reach a determination as to whether Uber drivers are in fact involved in interstate commerce and instead remanded the case to the District Court for resolution.

Wherever and whenever possible the attorneys at Mashel Law fight forced arbitration agreements because they deprive employees of their right to have their legal claims decided at trial by a jury of their peers. If you have a legal dispute with your employer and believe you are legally exempt from any arbitration agreement, do not hesitate to call us at (732) 536-6161 or fill out the contact form on this page so that we can review the agreement and evaluate its enforceability.  Mashel Law located in Marlboro, New Jersey are dedicated to exclusively protecting the rights of employees.