(Arbitrator and NAA member, Lise Gelernter comments on one important aspect of the recent Epic Systems decision. Additional commentary will be published in the upcoming days.)
On May 21, 2018, the U.S. Supreme Court held, in a 5-4 decision, that arbitration agreements that waive the parties’ rights to bring class and collective actions are enforceable and do not violate the National Labor Relations Act’s Section 7 guarantee of workers’ rights to engage in “concerted activity” regarding the terms and conditions of their jobs. Epic Systems Corp v. Lewis, ___ U.S. __ (5/21/2018) (Docket No. 16–285). The main basis for the majority’s decision was their finding that the Federal Arbitration Act (FAA), 9 U.S.C. §§1-16, requires courts to enforce all arbitration agreements, including “the parties’ chosen arbitration procedures.” Slip op. at 5.
One of the interesting outcomes of the Epic Systems case is that “transportation workers” are not affected by the Epic Systems case because they are exempt from the FAA. Circuit City Stores v. Adams, 532 U.S. 105, 119 (2001). The upshot is that employers cannot use the FAA to enforce agreements to arbitrate disputes or waive class action rights against truck drivers, flight attendants, railroad engineers and other workers deemed to be “transportation workers,” but they can enforce them against any other type of worker.
And who, exactly, is a “transportation worker?” That determination is very fact-dependent. In the Circuit City case, the Court had reasoned that the FAA exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” 9 U.S.C. § 1, applied only to seamen, railroad employees and other workers who did work similar to that of a seaman or railroad employee. The Court said this meant workers “ ‘actually engaged in the movement of goods in interstate commerce.’ ” 532 U.S. at 112, quoting Cole v. Burns International Security Systems, 105 F.3d 1465, 1471 (D.C. Cir. 1197). Applying this standard can require the splitting of some hairs. In Lenz v. Yellow Transportation, 431 F.3d 348 (8th Cir. 2005), the D.C. Circuit found that a Customer Service Representative for a trucking company was not a “transportation worker.” The customer service job involved working with customers to ensure that they got the trucking services they wanted. Because the representative did not lift, drive, handle, supervise or otherwise physically transport goods, he was not “engaged” in interstate commerce and was not exempt from the FAA. In contrast, the Third Circuit held that a Field Services Supervisor at a package delivery company was a “transportation worker,” because she supervised truck drivers and her work was very “closely related” to the transportation of interstate goods. Palcko v. Airborne Express, 372 F.3d 588 (3rd Cir. 2004).
As many scholars and labor and employment professionals pointed out when the Court decided Circuit City, the anomalous result of that decision is that a worker’s basic employment rights will differ depending upon the industry and the specific job that he or she holds. Epic Systems makes that difference even more glaring. The result is that a customer service representative at a trucking company can be forced to accept a class action waiver as a condition of employment, but the truck driver at the same company cannot.