On Wednesday, the Supreme Court heard oral arguments on two cases, Knick v. Township of Scott, Pennsylvania and New Prime v. Oliveira. In New Prime, the Court must decide whether the Federal Arbitration Act (“FAA”) applies to independent contractors in the trucking industry. Specifically, the FAA exempts from enforcement those arbitration clauses in “contracts of employment” for workers who are “engaged in” interstate commerce. The question in the case is whether that exemption is limited to employer/employee relationships or whether it also includes contracts with independent contractors. In this suit, a driver alleged that he was not paid minimum wage. He filed a class action against New Prime for unfair labor practices and wage and hour issues. If he were an employee, the suit would not be preempted by the FAA.

As CNBC’s Tucker Higgins points out, during oral arguments, Chief Justice stated, “[s]imply because someone would be considered or not considered an employee doesn’t necessarily answer the question of whether it’s a ‘contract of employment.’” Oliveira argued he was mischaracterized as an independent contractor but was an employee of New Prime, and that his role came under a “contract of employment” to do essentially the same job functions. JHiggins also notes that “If independent contractors are exempt from the FAA, the knock-on effect for the trucking industry and the economy overall could be significant.”

Justice Sotomayor asked the counsel for New Prime whether there is “any other area of law where we take the party’s label, ’employee’ versus ‘independent contractor,’ and give it binding effect?” The attorney responded, “I can’t think of one.” The issue for the trucking industry is that with capacity shortages and an increase in the shipment of goods through online shopping, the large number of truck drivers on the road seeking litigation could put stress on the industry causing an increase in prices to hit consumers.

In Knick, the Court weighed whether property owners must exhaust their state court remedies before bringing a Takings Clause claim to federal court. As SCOTUSBlog’s Miriam Seifter points out, during oral arguments,, several jutices asked whether Knick’s decision to circumvent the state-based precludes her from filing in federal court.

This post was written by ISCOTUS fellow Michael Halpin, Chicago-Kent Class of 2020, edited by Matthew Webber, ISCOTUS Editorial Coordinator, Chicago-Kent Class of 2019, and overseen by Carolyn Shapiro, ISCOTUS Co-Director and Chicago-Kent faculty member.