PROTECTING ARBITRATION: Assessing your Program’s Vulnerability After Bissonnette

By Staci Cassidy, JD, Senior Vice President, PartnerSource

 

Many Texas injury benefit programs incorporate an arbitration policy as the means for resolving any tort claims.  Our May 2024 Newsletter discussed two recent U.S. Supreme Court cases on arbitration (Saxon 2022 and Bissonnette 2024). Specifically, in these two cases, the Court that held an employee’s agreement in a contract of employment to resolve disputes with his or her employer through arbitration is not enforceable under the Federal Arbitration Act (“FAA”) when the employee’s primary work duties have a direct connection to, or reflect active engagement in, the movement of goods across state borders. This exception to enforcement of arbitration under the FAA, is commonly referred to as the “Transportation Worker Exception.”  If the Transportation Worker Exception applies, an employer’s arbitration policy may not be enforceable.

 

For the exception to apply, the employee must establish (1) the agreement to arbitrate is part of his or her contract of employment and (2) his or her typical job duties play a direct role in the movement of goods across state lines.  

 

Agreement to Arbitrate Part of Employment Contract

 

Employees claiming the exception do not typically have difficulty satisfying the first requirement.  Why? Most employers opt to obtain the employee’s agreement to resolve disputes through arbitration the easiest way, which is to make the agreement to arbitrate a condition of the employee’s at will employment. [1]   More specifically, an agreement to arbitrate is made when the employer provides written notice to the employee that: (a) all disputes over the cause of an on the job injury must be resolved through mandatory and binding arbitration and (b) by continuing employment after receiving this notice, he or she agrees to resolve such disputes through arbitration.

 

Employee’s Job Duties Play a Direct Role in Movement of Goods Interstate

In the overwhelming majority of cases where courts have examined the applicability of the Transportation Worker Exception, the focus has been on the second requirement:  whether the employee’s typical job duties play a direct role in the movement of goods across state lines.  Following the Court’s decisions in Saxon and Bissonnette, we anticipate more employees will claim their job duties satisfy the required nexus to the movement of goods interstate to qualify as a “Transportation Worker” under the FAA.  While not all employees will necessarily prevail, we have identified the following types of employees who will likely try.

(1)    Truck Drivers that travel interstate picking up and delivering freight;
(2)    Employees who unload trucks whose loads originated outside the State of Texas;
(3)    Employees who load trucks that will be delivered outside the State of Texas;
(4)    Dispatchers who dispatch drivers to pick up and deliver freight interstate;
(5)    Employees who plan how freight is to be loaded on a truck that will travel interstate and the route the driver will take to ensure its timely delivery (logistics);
(6)    Mechanics of commercial motor vehicles used to deliver and pick up freight interstate;

 

Prepare for the Challenge

 

If your program covers any of these types of employees, you may see a challenge to arbitration under your arbitration policy.  But, even if an employer cannot enforce the arbitration agreement under the FAA, it does not mean the employer cannot enforce the agreement under a different law. 

Since our May 2024 Newsletter, PartnerSource's Attorney Team Leaders have conducted independent research and consulted with several nonsubscriber defense firms to update our clients' arbitration policies with language aimed at enabling the employer to enforce the arbitration agreement when the FAA is not applicable.  Please consult with your Attorney Team Leader to learn more about whether your arbitration policy should be updated with this additional language and how best to communicate such update to your Texas Employees.