In modern times, there is a clear distinction in employment law between an “employee” and an “independent contractor.” An employee is a worker entitled to certain legal benefits, such as a minimum wage and overtime protections, while an independent contractor is not. But according to a recent decision of the U.S. Supreme Court, there are some older federal laws that do not distinguish one type of worker from another.
Gorsuch: No Difference Between “Employee” and “Independent Contractor” Under 1925 Law
This particular case, New Prime Inc. v. Oliveira, involves the Federal Arbitration Act (FAA), a 1925 law that effectively requires courts to enforce private arbitration agreements. The FAA is often used to compel workers to submit employment-related disputes to an arbitrator rather than pursue traditional litigation in court. In many cases, this creates an unlevel playing field in favor of the employer–nevertheless, the Supreme Court has tended toward strict enforcement of the FAA in recent years.
The parties to this dispute are an interstate trucking company and a man who worked as one of its drivers. The driver claims he is an employee who was denied “lawful wages” by the company. The company maintains the driver is an “independent contractor” who signed a binding arbitration agreement. A dispute then arose over whether arbitration is required to determine whether or not the arbitration agreement itself is enforceable.
Under the FAA, a court can not enforce an arbitration agreement involving “contracts of employment of … workers engaged in foreign or interstate commerce.” This would include a contract for someone working as an interstate truck driver. Nevertheless, the trucking company argued that “contracts of employment” only applied to “employees” and not independent contractors. Furthermore, the trucking company submitted only an arbitrator–not a judge–could decide which interpretation was correct.
The Supreme Court disagreed. Justice Neil Gorsuch, writing for the Court, explained that when Congress drafted the FAA in 1925, the term “contract of employment” was not “a term of art bearing some specialized meaning.” In other words, at there was no legal distinction between “employees” and “independent contractors.” Employment, Gorsuch observed, was merely a “synonym for work” and there was no distinction “between different kinds of work or workers.”
Given this, the truck driver's contract here with the company fell within the “interstate commerce” exception to the FAA. More to the point, Gorsuch said it was up to the courts–not an arbitrator–to decide whether this exception applied. In order for a court to decide if an arbitration agreement is enforceable, Gorsuch reasoned, it must first know whether or not a specific exception under the FAA applies.
Speak with a New York City Employment Lawyer Today
The Supreme Court's ruling is good news for a wide range of New Yorkers whose work involves interstate commerce. If you are dealing with an employment-related legal matter and are concerned about the potential impact of an arbitration agreement, you should speak with a qualified New York employment attorney as soon as possible. Contact the Law Offices of Mahir S. Nisar today to schedule a free initial consultation.