Recently, and for the first time in more than 20 years, the United States Court of Appeals for the First Circuit ruled on the transportation worker exemption contained in Section 1 of the Federal Arbitration Act (FAA). In Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st Cir. 2020), the court of appeals upheld a district court’s decision not to compel Amazon “AmFlex” delivery drivers (who are independent contractors) to arbitrate their wage claims. The decision is significant for companies that require their delivery drivers to sign arbitration agreements.
The FAA and Its Transportation Worker Exemption
The Federal Arbitration Act sets forth a procedural framework that requires courts to treat arbitration agreements as “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” While the FAA applies broadly, Section 1 of the statute renders its provisions inapplicable to contracts of employment of seamen, railroad employees, and other transportation workers engaged in interstate commerce. In Waithaka, the First Circuit addressed the question whether AmFlex drivers who do not cross state lines themselves, but who deliver goods that have crossed state lines, qualify as transportation workers “engaged in foreign or interstate commerce” who are exempt from the FAA under Section 1.
The Court’s FAA Analysis
The court of appeals began its FAA analysis by observing that the plaintiff, Bernard Waithaka, and his fellow class members were not excluded from the transportation worker exemption because they were independent contractors rather than employees. As the court noted, the Supreme Court of the United States recently held (in New Prime, Inc. v. Oliveira, 139 S. Ct. 532, 544 (2019)) that the FAA’s transportation worker exemption applies to “‘agreements to perform work’” and therefore applies with the same force to independent contractors that it does to employees.
The court then addressed...
