The U.S. Supreme Court has unanimously ruled in favor of a Southern California truck driver who claimed he was wrongly forced into an arbitration agreement with a major carrier.

In an 8-0 decision, the Supreme Court ruled that independent driver Dominic Oliveira could not be compelled by New Prime Trucking to settle a dispute over back wages through forced arbitration. Oliveira filed a lawsuit in 2013 to have a dispute over unpaid wages decided in open court.

The decision could have lasting repercussions for the trucking industry at Southern California’s ports. Many companies hire workers who are independent contractors, not formal employees, and these workers are forced to settle disputes through arbitration.

The court’s opinion

Justice Neil Gorsuch wrote the opinion of the court, with Justice Ruth Bader Ginsburg adding a concurrent opinion. Justice Brett Kavanaugh did not participate in the vote.

The decision, which affirmed a ruling by First Circuit Court, means that Oliveira can pursue his case in open court and not be forced into arbitration that could not be subject to appeal. His lawsuit eventually became certified as a class action.

Labor groups and worker rights advocates are praising the court’s decision. In a joint statement, Justice for Port Drivers and the International Brotherhood of Teamsters hailed it as “a great victory for all workers in the transportation industry.”

An issue of classification

Classification of thousands of truck drivers as contractors, and not employees, has been an issue at the ports of Los Angeles and Long Beach for several years.

“Although we have consistently challenged employers’ attempts to compel private arbitration to avoid a public legal battle, the U.S. Supreme Court ruling makes it clear that employers cannot and should not require drivers to waive their right to their day in court,” the statement read.

Missouri-based New Prime’s argument was based on the Federal Arbitration Act, a 1926 law that established arbitration as a mostly binding agreement. However, as Gorsuch noted in his opinion, that law may not compel arbitration in disputes involving “contracts of employment” for certain transportation workers.

That term also led to a discussion by Gorsuch about a distinction that was rarely made 93 years ago. Did “contracts of employment” make a distinction between payroll employees and independent contractors?”

“At that time, the term ‘contract of employment’ usually meant nothing more than an agreement to perform work,” Gorsuch wrote. “The dictionaries of the era consistently afforded the word ’employment’ a broad construction, broader than may often be found in dictionaries today.”

The ruling could have a long-term effect on businesses, said Thomas Lenz, a partner with Cerritos-based law firm Atkinson, Andelson, Loya, Ruud & Romo.

“It’s potentially impactful because so many people are labeled as independent contractors these days,” said Lenz, who practices employment law and also teaches at USC’s Gould School of Law. “Many are misclassified, and the law could put them as employees, which could leave employers liable.”