A federal appeals court set aside a lower court on Tuesday, ruling that a group of "last mile" delivery drivers, who deliver goods and materials shipped from abroad to a local warehouse, should not be exempt from arbitration under the Federal Arbitration Act.
A group of drivers for New York-based US Pack Holdings LLC, led by Curtis Hamrick, who had signed an independent contract with the company, had sued in the U.S. District Court in Orlando and sought a decision they were exempted under the FAA from need to arbitrate their claims to a fair standard of work, according to the decision of Curtis Hamrick vs. Partsfleet LLC et al.
The workers claimed that because the US Pack controlled their duties and salaries, instructed them which customer to serve, dictated customers' pay rates and assigned them routes, they were actually employed by the FLSA and entitled to overtime.
The district court ruled that the exemptions are exempt under the FAA, which do not "apply to employment contracts for seafarers, railway workers or any other type of foreign or intergovernmental worker", and refused to compel them or arbitrate their FLSA claims.
The decision is set aside by a unanimous panel court with three judges. "The district court concluded that the drivers fall within the exemption for transport workers because 'the goods in question in this case originated (d) in trade between the states and (were delivered), converted to their destination", the decision states.
“Like the drivers, the district court focused on the movement of goods and not on the working class. This was wrong, "it said. "The exemption for transport workers only applies if the worker belongs to a class of workers in the transport industry and the class of workers who actually engage in foreign trade or intergovernmental trade," it said.
The referral case back to the district court to determine whether the drivers "are a class of workers employed in the transport industry and whether the class essentially actually trades between the countries (although some individual plaintiffs do not)."
It agreed with the lower court's denial of the employer's proposal to enforce arbitration under state arbitration law, stating that it is not competent.
A lawyer for Mr. Hamrick had no comment, while US Pack attorneys did not respond to a request for comment.
In May, the Department of Labor repealed a Trump-era rule that would have made it easier for companies to classify workers as independent entrepreneurs instead of employees under the FLSA.