Truck Driver Did Not Have to Arbitrate Claim for Unpaid Wages

 

By Joanne Deschenaux May 23, 2019
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Even though a truck driver had an agreement with his employer to arbitrate all employment-related claims, he could not be forced to arbitrate his claim for unpaid wages, a California appellate court ruled.

The Federal Arbitration Act (FAA) did not apply to the driver's claim because his job fell within the law's exemption for transportation workers engaged in interstate commerce even though he did not transport goods across state lines, the court found.

Because the FAA did not apply, the issue was governed by California law, and a provision of the California Labor Code authorizes lawsuits for unpaid wages even if the parties agreed to arbitrate those claims, the court concluded.

RMFL is a licensed motor-carrier company that employs truck drivers at its six California terminals to transfer freight to and from various destinations. More than 99 percent of the cargo RMFL transports originates outside California, but RMFL transports the cargo within California only.

The plaintiff worked as an RMFL truck driver for less than a year. Like other RMFL drivers, all of his trips were entirely within California; he never transported freight across state lines. According to RMFL's records, the plaintiff's deliveries typically involved driving from RMFL's Fresno terminal to locations such as San Jose or Sacramento, and then back to Fresno.

At RMFL's request, the plaintiff signed a two-page written agreement requiring him to "utilize binding arbitration to resolve all disputes that may arise out of the employment context."

The plaintiff's employment with RMFL ended in September 2014. Two years later, he filed a class-action complaint against RMFL, asserting a claim for unpaid wages, among other claims. RMFL moved to compel individual arbitration, and the trial court denied the motion as it applied to the wage claim. RMFL appealed.

Federal Arbitration Act Doesn't Apply

The court first noted that Congress enacted the FAA in 1925 to compel judicial enforcement of a wide range of written arbitration agreements, notwithstanding any state laws or policies to the contrary.

When the FAA applies, the court said, it pre-empts any state-law rule that limits arbitration. Section 1 of the FAA, the court added, provides a limited exemption from FAA coverage to contracts of employment of "workers engaged in foreign or interstate commerce." The U.S. Supreme Court has concluded that the phrase "workers engaged in foreign or interstate commerce" does not refer to all workers involved in such commerce but rather only to transportation workers.

However, the court noted, federal courts are divided on whether and when truck drivers and delivery drivers qualify as transportation workers.

If a truck driver physically transports goods across state lines, he or she undoubtedly qualifies as a transportation worker under Section 1, the court said. But what about when the truck driver never crosses state lines in performing his or her duties?

The court noted that courts are split on the answer to this question, but "taking into account the circumstances as a whole," it concluded that the plaintiff was actually engaged in the movement of goods in interstate commerce and qualifies as a transportation worker under Section 1.

The court noted that the employer, RMFL, is a licensed motor-carrier company in the business of transporting freight and therefore is part of the transportation industry. And the vast majority of the goods the plaintiff transported originated across state lines. So even though the plaintiff was not personally transporting goods from state to state, he played an integral role in transporting those goods through interstate commerce. Thus, the court concluded that the plaintiff was exempt from FAA coverage.

Because the FAA was inapplicable, the court found that its analysis was exclusively guided by California law and, more specifically, by Section 229 of the California Labor Code, which authorizes lawsuits for unpaid wages even if the parties agreed to arbitrate those claims. 

[SHRM members-only HR Q&A: What are the California rules regarding mandatory arbitration agreements?]

The court concluded that under Section 229, the parties' arbitration agreement didn't apply to the worker's claim for unpaid wages, and it ruled that the trial court correctly refused to order arbitration.

Muller v. Roy Miller Freight Lines LLC, Calif. Ct. App., No. G055053 (May 1, 2019).

Professional Pointer: Section 229 of the California Labor Code is limited to claims for unpaid wages. The trial court in this case did order arbitration for several of the plaintiff's claims, including claims for unpaid rest breaks, missed meal periods and incomplete wage statements.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.  

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