Transportation Worker May Proceed in Court with Wage and Hour Class Action Lawsuit Despite Agreement to Arbitrate Claims

Transportation Worker May Proceed in Court with Wage and Hour Class Action Lawsuit Despite Agreement to Arbitrate Claims

On March 22, 2019, a California court of appeal published its decision in Nieto v. Fresno Beverage Company, Inc., affirming a trial court’s order denying an employer’s petition to compel arbitration. The plaintiff, a delivery truck driver, filed a class action lawsuit in court alleging violations of California’s meal period, rest period, and minimum wage and overtime wage laws, seeking waiting time penalties and relief for the employer’s failure to maintain accurate payroll records. The arbitration agreement the plaintiff had signed with his employer provided that “arbitration was to be the exclusive remedy for all employment disputes, including disputes related to wage and hour issues.”

The Nieto court acknowledged that the Federal Arbitration Act “reflects a liberal federal policy favoring arbitration and requiring courts to enforce arbitration agreements according to their terms,” but the FAA also contains an exemption to its scope for “transportation workers engaged in interstate commerce.” The Nieto court made clear that it was not necessary that the employee “actually transport goods across state lines to be part of a class of employees engaged in interstate commerce,” but rather it was sufficient that his job required his “participation in the continuation of the movement of interstate goods to their destinations.” Accordingly, Mr. Nieto was exempt from the FAA and was able to litigate his wage claims in court despite entering a written agreement to arbitrate those claims.