Gig economy companies received bad news yesterday when yet another federal appeals court ruled that delivery drivers – even independent contractors – can escape otherwise valid arbitration agreements. This is now the third federal appeals court to conclude that the “transportation worker” exemption in the Federal Arbitration Act should be read broadly enough to exempt typical gig economy workers, setting up a split in the circuits that has businesses operating across the country scratching their heads on how to proceed. What do gig economy companies need to know about the 9th Circuit’s ruling against Amazon.com?
A federal appeals court just handed Grubhub – and gig economy companies in general – a pivotal victory by narrowly interpreting an exception allowing certain transportation workers (including independent contractors) to escape arbitration agreements. The 7th Circuit Court of Appeals joined a Massachusetts federal court by ruling that gig workers cannot avoid arbitration provisions by claiming they are exempt transportation workers. But what makes this ruling the most significant yet is not just simply because it came from a federal appeals court instead of a lower district court, but because of the wide-sweeping rationale used to justify the decision. What do gig economy businesses need to know about this ruling?
A Massachusetts federal court just ruled that gig workers cannot escape arbitration provisions by claiming they are exempt transportation workers. The September 30 decision in Austin v. DoorDash marks the second win for gig businesses following a troubling Supreme Court ruling in January 2019 that opened the door to a possible arbitration exemption. However, there remain other federal courts that have ruled for workers on this issue, and the Massachusetts court even indicated there could have been worker victory had the fact pattern been slightly different, so companies are not out of the woods on this issue by a long shot.
Great news for gig economy businesses from an Illinois federal court: a judge recently ruled that Grubhub’s delivery drivers were not operating in “interstate commerce,” and therefore were not excluded from the company’s mandatory arbitration agreement. The March 28 ruling is one of the first decisions on this subject following January’s Supreme Court ruling casting this issue into doubt. While the fight is not over, round one goes to gig economy companies.
The $100 million settlement announced Monday by a transportation company to resolve a long-running misclassification claim might be the direct result of a January Supreme Court decision, and might be a troubling harbinger of things to come for many gig economy businesses. Swift Transportation paid the massive sum to a group of drivers who claimed they were improperly classified as “owner-operator” contractors when they should have been treated as employees, but only agreed to the deal after it became clear that recent legal precedent from the SCOTUS meant that they could not resolve the dispute in arbitration. What does this settlement signal for gig economy businesses in general?