Crossing state lines and possibly eluding arbitration

On July 28, Chief District Judge Freda L. Wolfson in the U.S. District for the District of New Jersey denied Amazon’s request to dismiss a delivery driver’s employee misclassification lawsuit. The judge ordered the parties to engage in discovery (pretrial fact-finding) to determine whether the driver was engaged in interstate commerce, which would make him exempt from arbitration under the Federal Arbitration Act (FAA).

Facts

Amazon employed Robert Harper as a delivery driver through its Amazon Flex app. Through the app, the company hires independent contractor drivers to use their own personal vehicles and make deliveries to customers.

Harper filed suit in November 2019 alleging he was improperly misclassified as an independent contractor and thus entitled to overtime and minimum wage compensation under New Jersey wage and hour laws.

Amazon asked the court to dismiss Harper’s case and compel arbitration under the parties’ arbitration agreement, which required them to resolve disputes under the FAA. Alternatively, the company argued the Washington and New Jersey arbitration statutes required him to arbitrate.

Court’s decision

Section 1 of the FAA says its requirements don’t “apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Previously in New Prime, the U.S. Supreme Court found the FAA Section 1 exemption applies to independent contractors who are engaged in interstate commerce as well as employees.