What's Happening?
Schmidt Baking delivery drivers have been granted another opportunity to utilize an arbitration exemption for transportation workers, allowing them to keep their wage claims in court. This decision was
made by a federal appeals panel, which ruled that the drivers' LLCs' distribution agreements with Schmidt Baking Co. and Schmidt Baking Distribution LLC qualify as 'contracts of employment' under the Federal Arbitration Act. This ruling by the US Court of Appeals for the Second Circuit creates a circuit split, as other appeals courts have previously determined that business-to-business contracts do not fall within this exemption. The case highlights ongoing legal debates over the scope of arbitration exemptions for transportation workers.
Why It's Important?
The ruling is significant as it impacts the legal landscape for transportation workers seeking to resolve wage disputes. By allowing these drivers to pursue their claims in court, the decision could set a precedent for similar cases, potentially affecting how arbitration agreements are interpreted in the transportation industry. This could lead to increased litigation costs for companies and influence how they draft contracts with independent contractors. The decision underscores the ongoing tension between employers and workers over arbitration clauses, which are often seen as limiting workers' ability to seek redress through the courts.
