A federal appeals court affirmed earlier this month that an Amazon Flex driver who never crossed state lines while delivering parcels for the online retailer was a person engaged in interstate commerce and can’t be compelled to take his grievances to arbitration.
The case filed by Massachusetts Amazon Flex driver Bernard Waithaka dates back to his signing up as an Amazon Flex driver in January 2017. Amazon Flex recruits individuals to drive their own vehicles and deliver Amazon packages to customers, supplementing the deliveries of larger parcel carriers like UPS.
Waithaka’s unhappiness surfaced quickly: He filed an action in Massachusetts state court in August of the same year he joined, saying the rules he operated under had misclassified him as an independent contractor rather than an employee, his out-of-pocket expenses violated the Massachusetts Wage Act, and his compensation violated the state’s minimum wage laws. He also sought to have his lawsuit certified as a class action.
In the decision handed down by the Court of Appeals for the First Circuit, the three-judge panel described the situation Waithaka and other Amazon Flex contractors faced. They are paid an hourly rate but not compensated if they don’t finish their shift in the established time. They aren’t paid for gasoline, maintenance or cell phone expenses. Waithaka and others also must sign a Terms of Service agreement that requires disputes to go through arbitration and they can’t be turned into class actions.
Parallels with New Prime case
Similar to the decision in the landmark New Prime case, which is coming to an end via a multimillion-dollar settlement, Waithaka’s case against Amazon does not establish whether the Amazon Flex driver should be considered an employee. Rather, in both the New Prime and the Waithaka case, the key question is whether the Federal Arbitration Act applies to workers who are involved in transportation, since the FAA includes what might be viewed as “carve-outs” for transportation workers involved in interstate commerce.
Impact of the decision
The significance of the Waithaka decision against Amazon is threefold: It ruled that even though the driver kept all his activities in the Bay State, he was still “engaged in … interstate commerce,” meaning he was exempt from the FAA and Amazon couldn’t compel arbitration under federal law. Secondly, the court held that Amazon couldn’t use state law to compel arbitration because the class waiver in the parties’ agreement was void. Finally, because the FAA did not apply and arbitration could not be compelled under state law, the parties will have to fight in court, not arbitration, and the plaintiff may try to gain class treatment of his claims.
In that sense it has similarities to the New Prime case, as the U.S. Supreme Court decision that ultimately set the wheels going and led to the recent settlement was that the FAA did not apply to the complaint brought by truck driver Dominick Oliveira and arbitration could not be compelled.
The decision in the New Prime case was cited as a precedent in the court reaching its decision in the Amazon Flex case. But with the New Prime case settling rather than being adjudicated, it sets no precedent on the question of driver classification.
“The First Circuit concluded that the delivery drivers were exempt from the Federal Arbitration Act,” Braden Core, a partner at the trucking-focused law firm of Scopelitis Garvin Light Hanson & Feary, said in an email to FreightWaves. “That’s important because, if the FAA had applied, the class waiver in the arbitration agreements most likely would have been enforceable.” The class waiver is the part of the terms of service that if implemented would have blocked an employee who signed them from pursuing a class action.
The decision in the case also had extensive discussion about whether state arbitration law in Massachusetts or Washington, where Amazon is based, could be used to compel arbitration. But Core said the waiver is void under Massachusetts law, and therefore Amazon couldn’t “contract around” the Massachusetts standard by trying to force the dispute into arbitration in Washington.
Defining what the Amazon Flex driver did as interstate commerce, even though he never left the state, involved the court adopting what Core said was the “regulatory definition of interstate transportation, whether the goods are moving in interstate commerce.” In an email update, the broader Scopelitis law firm noted that the decision on the definition of interstate commerce is the first time that a circuit court decision like this has been handed down, though other decisions are pending.
Core said Amazon may attempt to appeal. But if the decision is ultimately upheld, it would mean that the Waithaka decision would end up in court rather than arbitration, where Amazon preferred it be heard..
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