Are Amazon delivery drivers engaged in interstate commerce like seamen and railway workers? The First Circuit Court of Appeals ruled they are, meaning the company can’t rely on an arbitration clause to duck lawsuits over working conditions.
The ruling in question involves Bernard Waithaka, a driver who used his own car to carry out “last mile” deliveries for Amazon in Massachusetts. Waithaka alleges the company violated the state’s minimum wage laws, and illegally classified him and other drivers as independent contractors rather than employees.
Amazon responded to Waithaka’s lawsuit by pointing to a clause in its Amflex app—an app that Amazon uses to oversee deliveries with its own fleet of drivers. The clause requires drivers to waive their right to sue Amazon and instead to resolve any disputes under the Federal Arbitration Act of 1925.
This tactic of compelled arbitration is widely used by big companies, and its legality has been repeatedly upheld by the Supreme Court. The Arbitration Act, however, contains a significant carve-out for “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
In his lawsuit, Waithaka claimed that the carve-out should apply to Amazon drivers like him. The company pushed back, saying he couldn’t have been engaged in interstate commerce since he never left the state of Massachusetts.
A unanimous three-judge ruling of the First Circuit disagreed with Amazon’s interpretation of the law, pointing to a series of railway cases and other precedents to conclude workers don’t have to cross state lines to claim the Arbitration Act carve-out.
“Waithaka and other last-mile delivery workers who haul goods on the final legs of interstate journeys are transportation workers ‘engaged in…interstate commerce,’ regardless of whether the workers
themselves physically cross state lines,” the panel wrote.
The ruling has significant implications not only for Amazon but other companies like Postmates that rely on fleets of drivers to carry out deliveries. Such companies prefer to treat these drivers as contractors because it permits them to avoid numerous state laws related to wages and working conditions—a situation that could crumble if drivers are able to bring class action lawsuits challenging the classification.
The First Circuit’s ruling is likely not the final say on whether delivery workers are engaged in interstate commerce. Mike Sacks, a former lawyer and Supreme Court watcher, noted on Twitter that last week’s ruling tees up the issue for the country’s top court.
Amazon did not immediately reply to a request for comment about whether it will appeal the ruling to the Supreme Court. In the meantime, a lower court will continue to hear Waithaka’s claims about whether the company violated minimum wage and other employment laws.
More must-read finance coverage from Coins2Day:
- Meet the one-branch bank that did more PPP lending than Citi
- Are we seeing a “reverse square root”–symbol economic recovery?
- “A real bind”: Banks that carry out Trump’s new sanctions could violate Hong Kong security law
- The best and worst places in the U.S. To invest in real estate during the pandemic
- Why slashing product prices is usually a terrible idea
