Supreme Court hears case against New Prime Inc. over driver misclassification

The Supreme Court's ruling could have a huge impact on driver wages and consumer costs.

Supreme Court

The Supreme Court is currently hearing a case that could have a serious long-reaching impact on the way truck drivers are paid moving forward.

On Wednesday, October 3, the Supreme Court (minus a justice) heard the case of Missouri-based trucking company New Prime Inc. v. Oliveira, according to CNBC.

The suit was filed years ago by long haul truck driver Dominic Oliveira, who alleges that Prime failed to pay him minimum wage and misclassified him as an independent contractor.

Oliveira went through Prime’s apprenticeship program, which was, according to court documents, described as a paid CDL training program. The suit claims that Oliveira was not paid during his orientation and that while he was paid 14 cents per mile while driving as a part of the Prime apprenticeship program, this pay was docked for funds advanced to him to pay for meals. After completing the apprenticeship program, Oliveira says that Prime representatives told him that he would make more money as an independent contractor and that he was rushed through signing the necessary contracts because he was told that he had just received his first load.

Oliveira said that while he was employed as an independent contractor with Prime, he was unlawfully underpaid and that he was treated in virtually the same way as a company driver. Oliveira eventually quit his job and was rehired by Prime as a company driver just a month later. He claimed that his duties were practically identical to when he had been employed as an independent contractor. He says that Prime was in control of his schedule, home time, and that his truck was tracked with a GPS device while he worked as an independent contractor for the company.

Oliveira then filed a class action suit against Prime for back wages from his training time and Prime responded by requesting arbitration, as required by the contracts Oliveira signed in an alleged rush.

A lower court declared that Oliveira was exempt from the arbitration agreement thanks to the the Federal Arbitration Act (FAA), which exempts certain transportation workers from mandatory arbitration agreements.

If the Supreme Court finds that independent contractors are indeed exempt from the FAA, some industry experts warn that driver wages are likely to increase, which in turn could lead to an increase in consumer costs of as much as 20%.

Court watchers call the case a battle between labor and business interests, and, according to logistics industry analyst J. Bruce Chan of Stifel Capital Markets, a ruling in favor of truckers could be a hard hit to the U.S. economy: “We are ultimately looking at the inability of goods to move, or at least a significant increase in cost to consumers. Target, Walmart, a mom and pop trinket store selling porcelain goods on their web store, they are all going to see an increase in costs from truckers, and eventually that will get passed along to the consumer.”

You can click here to read a transcript of this morning’s Supreme Court arguments.