NELP filed an amicus brief in Silva v. Schmidt Baking, a wage theft case brought by commercial truck drivers who transport goods for Schmidt Baking, a baked foods conglomerate, to retailers across Connecticut.
Plaintiffs were initially hired as W-2 employees. Months later, Schmidt Baking required them to form limited liability corporations and execute “Distributor Agreements” to keep their jobs, while retaining substantial control and oversight over drivers’ work. Plaintiffs argue that Schmidt misclassified them as independent contractors, unlawfully deducted fees from their paychecks, and failed to pay them overtime.
Section 1 of the Federal Arbitration Act includes a long-standing exemption for “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” interpreted by the Supreme Court to apply to “transportation workers.” Despite this, a Connecticut district court ordered individual arbitration of the drivers’ claims. Because the Distributor Agreements were agreements between “companies,” the court found that Plaintiffs were not covered by the transportation “worker” exemption.
We argue the court should certify an appeal of the arbitration order so the Second Circuit can resolve the question of whether employers like Schmidt may use incorporation requirements to evade Section 1’s exemption and force their workers’ claims out of court and into private arbitration. We urge the court to recognize the growing prevalence of this kind of misclassification scheme and the impact of allowing companies to create a loophole in Section 1’s exemption—denying misclassified workers a chance to bring their claims in court by misclassifying them in the first place.
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