Earlier this year, the U.S. Supreme Court invalidated the arbitration agreements that an interstate trucking company had with its independent contractor drivers. That case arose in the context of a class action wage and hour lawsuit brought by a group of independent contractor interstate truck drivers alleging that they were not properly paid.  The company attempted the force the claim into arbitration based on the arbitration agreements it had with its contractors.  The Court held that the Federal Arbitration Act’s (FAA) provision excluding “contracts of employment with seaman, railroad employees or any other class of workers engaged in foreign or interstate commerce” precluded enforcement of the arbitration agreement thereby subjecting the carrier to the wage and hour collective action in court.

The New Prime decision is a good reminder for transportation companies utilizing arbitration agreements that their arbitration programs should consider whether to implement and apply state law rather than the FAA so as to avoid a similar result as in New Prime or to have state law act as a substitute in the event the FAA is inapplicable.

A copy of New Prime v. Oliveira is available here.