SCOTUS’ New Prime decision highlights need for groups like OOIDA
January 18, 2019
Recently, truckers scored a big win when the U.S. Supreme Court ruled in favor of a driver in a case about independent contractors and arbitration. The ruling exposed two things: 1) Investors do not care about workers and 2) the dire need for worker-friendly rights groups and associations.
Oliveira v. New Prime
Some quick background information. As reported by Land Line Associate Editor Mark Schremmer, SCOTUS determined that all transportation workers are exempt from the Federal Arbitration Act. This includes independent contractors.
That last part is extremely important.
Here’s a quick breakdown of the case:
- Truck driver Dominic Oliveira sues New Prime for lost wages.
- New Prime tries to force arbitration via Federal Arbitration Act, arguing that Oliveira is an independent contractor rather than an employee.
- Appeals court rules that all transportation workers, including independent contractors, are exempt from the FAA.
- New Prime argues to SCOTUS that FAA exemption only applies to employees.
- SCOTUS upholds appellate decision in favor of independent contractors working in transportation, saying they too are exempt from FAA.
It’s the all-too-familiar case of independent contractor vs. employee in trucking with the twist of evoking FAA. SCOTUS’ ruling essentially gives all truckers, employees and independent contractors, the right to seek legal action against a company rather than being forced into arbitration, which greatly favors companies over workers.
It is a huge win for transportation workers.
Wall Street hates fair wages for workers
On the same day SCOTUS announced its decision in the New Prime case, CNBC reported that transportation stocks began to sink. The Dow Jones Transportation Average index fell nearly 100 points despite the entire Dow Jones Industrial Average index experiencing a decrease of more than 150 points. The decision was announced at approximately 9 a.m. Eastern, just before trading hours commenced.
In fact, check out the components of the Dow Jones Transport index for Jan. 15, which includes 20 companies (red denotes price loss, green denotes price gain):
- Alaska Air
- American Airlines
- Avis Budget Group
- C.H. Robinson
- Expeditors International of Washington
- JB Hunt
- JetBlue Airways
- Kansas City Southern
- Kirby Corporation
- Matson, Inc.
- Norfolk Southern
- Southwest Airlines
- Union Pacific
- United Continental Holdings
With the exception of Matson, which is mostly an ocean shipping company, all the companies that had a good day were airlines. Anyone associated with independent contractors (rail and trucking companies), had a bad day. Most of these companies reported higher prices in preceding and subsequent days.
Wall Street’s message was clear: Paying drivers a fair wage is bad for shareholders.
Investors’ kneejerk reaction to the SCOTUS decision suggests that the proverbial “1 percent” views workers as numbers on a spreadsheet rather than human beings who need to earn a living. Cutting costs on advertisement, for example, is one thing. Reducing overhead by sending hardworking truck drivers to the poorhouse is quite another.
As long as corporations can get away with undercutting workers, they most certainly will. Until Jan. 15, trucking companies had a good run screwing over independent drivers by forcing them into arbitration.
Historically, this holds true, which brings me to my final takeaway of the SCOTUS decision …
Americans still need workers’ rights groups
Quick history lesson for context. The Great Depression highlighted the need to protect workers. As part of Franklin D. Roosevelt’s New Deal, several programs were established to ensure the well-being of the American worker.
One such program is the National Labor Relations Act of 1935, aka the Wagner Act. This guarantees that workers in the private sector have the right to organize into trade unions, participate in collective bargaining, and the right to take collective action such as a strike. Naturally, business groups were opposed.
Most of the wage lawsuits involving independent contractors are based on minimum wage and overtime pay after working 40 hours a week. Minimum wage and overtime pay were established in the Fair Labor Standards Act of 1938, also part of the New Deal.
Essentially, FDR realized that without representation from unions and federal law mandating certain working conditions, companies could not be trusted to treat workers fairly because it is the right thing to do. If not forced into moral decisions, companies had no issue treating workers poorly if it meant a higher profit margin.
Unions existed before the New Deal. However, they began to decline significantly during the Roaring ‘20s. Why give money to a group for better working conditions when everything is already great?
Although trade association and union membership experienced an uptick after the Great Depression, it has been on a steady decline since in the past several decades. According to the U.S. Bureau of Labor Statistics, membership went down from 20.1 percent of all workers in 1983 to 10.5 percent in 2018.
As workers’ rights groups declined, income inequality has gone up.
According to Pew Research, income inequality is the highest it has been since 1928.
Although paychecks are increasing over time, averages wages have actually been relatively stagnant the past three decades, at least.
Despite the numbers suggesting workers are not getting their fair share, workers’ rights groups are still struggling in some areas. This can be partly explained by the “free-rider” problem, e.g., people opting out of groups knowing they will still receive the benefits.
Another Pew Research poll reveals that more than half of Americans hold a favorable view of unions. However, less than 11 percent our members. In other words, American workers recognize the need for representation, but do not want to put in any of the work.
I’m using union stats because they are easily available, but this applies to all worker groups such as associations, advocacy groups, etc. The Owner-Operator Independent Drivers Association is a good example. It is not a union, but it fights for the rights of all truckers. Without groups like OOIDA and their members, exploitation of workers will continue.
OOIDA and other similar associations and groups are the checks and balances in the private sector. The government is separated into three separate and equally power branches for checks and balances. The private sector is basically split into two branches: Businesses and employees. However, the former holds significantly more power with more representation in Washington that is widely accepted by business owners.
Workers have access to the same power. They just need to embrace it. OOIDA has Washington, D.C., staff to represent truckers against the powerful branch of corporations. As long as rules are being broken (or rules need to be rewritten in the interests of workers), there will ALWAYS be a need for groups like OOIDA. The referenced SCOTUS decision is proof.