Fine Print Drives Illinois Truckers Back to Arbitration

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By Lawrence E. Dubé

Illinois truck drivers who claim they were misclassified and underpaid by an auto transporter must address their arguments to an arbitrator rather than a judge, a federal district court ruled.

The ruling shows that workers who want to challenge agreements that classify them as independent contractors should be prepared for a detour through arbitration before they can get a day in court.

Drivers signed arbitration agreements with Vehi-Ship LLC that covered their wage claims under the Fair Labor Standards Act and the Illinois Minimum Wage Law. The drivers dispute the scope of the agreements and whether they’re even enforceable, but Judge Edmond E. Chang of the U.S. District Court for the Northern District of Illinois said Nov. 27 an arbitrator should be the first to consider those issues ( Ali v. Vehi-Ship, LLC , N.D. Ill., No. 17-cv-2688, 11/27/17 ).

The drivers argued Vehi-Ship’s standard agreement contains a waiver of class and collective actions that is invalid under the National Labor Relations Act. Chang said that didn’t make the entire arbitration provision unenforceable in a case brought by six individuals who weren’t requesting class relief.

Dispute Over Arbitrating Wage Claims

Rashida Ali and five other drivers filed the lawsuit, alleging they were misclassified as independent contractors and denied minimum wages and overtime payments due under federal law. They also claimed Vehi-Ship made deductions from their wages in violation of an Illinois statute.

The company asked the court to dismiss the lawsuit, arguing that the drivers signed standard agreements to arbitrate any claim “arising out of” the agreement. The agreements provided for arbitrations in Texas under the commercial arbitration rules of the American Arbitration Association.

Chang said the principal issue before him was whether the court should resolve the “gateway” issue of whether the dispute belonged in arbitration. Generally, he said, courts decide such issues, but “the AAA Rules,” which were incorporated into the drivers’ contracts, “could not be clearer about the power of the arbitrator to decide gateway arbitrability issues.”

The drivers argued the arbitration agreement is invalid because the U.S. Court of Appeals for the Seventh Circuit held in 2016 that when such agreements contain waivers of the right to participate in class or collective actions or proceedings, they run afoul of the NLRA’s guarantee that employees may join together in concerted activity for their mutual aid or protection.

Chang said the Vehi-Ship drivers’ argument “presumes they are entitled to the raft of statutory protections that comes with employment,” but there is an unresolved dispute about whether the drivers are independent contractors, in which case they would have no NLRA protections. “The arbitrator must decide whether a dispute about the parties’ work relationship falls within the scope of the arbitration clause,” Chang wrote.

The court also said that a “savings clause” in the driver agreements could mean that even if the driver contracts contain an invalid provision concerning class action rights, the six drivers would still be bound as individuals to arbitrate their wage and hour claims against Vehi-Ship.

An attorney for the employees declined to comment on the ruling. Counsel for Vehi-Ship didn’t immediately respond to a request for comment.

O’Connor O’Connor P.C. in Elmhurst, Ill., represented the drivers. Kurt E. Vragel Jr. P.C. in Glenview, Ill., represented Vehi-Ship LLC.

To contact the reporter on this story: Lawrence E. Dubé in Washington, D.C. at ldube@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com

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