December was a very slow month for court decisions affecting independent contractors, but both decisions reported below confirm that effectively drafted arbitration clauses remain one of two “best friends” for businesses that engage independent contractors. On the very day the U.S. Supreme Court issued its decision in New Prime Inc. v. Oliveira in January 2019, we predicted here that, despite some commentators’ exuberance and others’ despair, the decision “may have little or no impact as to whether workers classified as independent contractors can be compelled to arbitrate their IC misclassification claims.” In New Prime, the Supreme Court held that a court, not an arbitrator, should decide if an IC is covered by the Federal Arbitration Act’s arbitration exclusion for workers engaged in interstate transportation. We commented that the FAA is not the only basis upon which companies can seek to compel arbitration; most state arbitration laws, which typically do not have exclusions for interstate transportation workers, also may provide an alternative basis to compel arbitration of IC misclassification class action claims. That is exactly what transpired in one of the two IC arbitration cases we discuss below.
The other best friend for businesses using ICs is the maintenance of an independent contractor relationship that has an enhanced level of compliance with federal and state IC laws. This can be accomplished through a process such as IC Diagnostics (TM) that restructures, re-documents, and re-implements IC relationships in a customized and sustainable manner consistent with a company’s existing business model. The combination of an effectively-drafted arbitration agreement with class action waiver together with the use of a process such as IC Diagnostics minimizes not only a company’s exposure to IC misclassification liability but also the likelihood of even being sued in the first place – or being sued repeatedly, as many companies have endured.