The U.S. Supreme Court on Tuesday sided with a long-haul truck driver who sued his employer for failing to pay him a minimum wage, handing down a decision that could have broad ramifications on the transportation sector and the economy as a whole.
In an opinion delivered for a unanimous court, Justice Neil Gorsuch held that courts must decide whether an exception in the Federal Arbitration Act, or FAA, for transportation workers applies before requiring arbitration. And, he wrote, that exception applies not just to traditional employees but also to independent contractors.
The upshot of the holding is that, under the nearly 100-year-old FAA, which is generally presumed to favor employers, thousands of truck drivers who are employed as independent contractors cannot be forced into private arbitration.
Following the release of the decision, shares of companies in the transportation sector lagged the broader market. Dow Transports finished the day down three-quarters of a percent on a positive day for the major indexes.
The outcome of the case was largely expected following oral arguments in October.
The court's ruling was narrow, leaving uncertain whether its decision would apply to truckers who did not cross state lines, according to attorney Bob Roginson of Ogletree Deakins, chair of the law firm's trucking and transportation industry group.
Nonetheless, it marks a rare win for workers at the high court. The U.S. Chamber of Commerce, a powerful business lobby, had urged the justices to rule the opposite way and said that its members had structured "millions of contractual relationships — including large numbers of agreements with independent contractors — around the use of arbitration to resolve disputes."
The ruling could boost wages in the trucking industry, experts said, a boon for truckers that is expected to lead to higher consumer prices. J. Bruce Chan, a vice president and senior analyst at Stifel Capital Markets who covers logistics firms, told CNBC in October that a ruling in favor of the trucker, Dominic Oliveira, could result in "a significant increase in cost to consumers."
The case centered on whether the FAA, which exempts from mandatory arbitration the "contracts of employment" of transportation workers, was intended to apply to independent contractors when Congress passed the law in 1925.
In an opinion rich with historical detail and citations to early 20th century legal dictionaries, Gorsuch said that it was.
"Notice Congress didn't use the word 'employees' or 'servants,' the natural choices if the term 'contracts of employment' addressed them alone," wrote Gorsuch, whom President Donald Trump appointed in 2017. "Instead, Congress spoke of 'workers,' a term that everyone agrees easily embraces independent contractors."