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On July 27, 2022, the Massachusetts Supreme Judicial Court of (“SJC”) held that food delivery app drivers do not fall within the narrow category of employees who are exempt from arbitration under § 1 of the Federal Arbitration Act (“FAA”) because they are “engaged in foreign or interstate commerce.”
In Archer v. Grubhub, Inc., the plaintiff delivery drivers delivered food to customers ordered over an app from local restaurants and convenience stores. These pickups and deliveries all occurred within Massachusetts state lines. The drivers’ employer, the food delivery app, had distributed an arbitration agreement to the drivers through an online portal. The agreement also included a class action waiver. The drivers all signed the arbitration agreement.
The drivers filed a lawsuit against the food delivery app alleging Wage Act violations. In return, the food delivery app-employer filed a motion to compel arbitration.
The SJC held that the arbitration agreements signed by the drivers were binding because the class of drivers did not move goods across state or national borders and, therefore, the drivers were not “engaged in foreign or interstate commerce.”
The takeaway from Archer is that Massachusetts employers should be able to enforce arbitration agreements against a class of employees who do not cross state lines as part of their work, but may not be able to enforce arbitration agreements against employees in a class that does. That said, employers should also be aware that even a valid arbitration agreement does not deprive the Massachusetts Commission Against Discrimination or the Equal Employment Opportunity Commission of the ability to separately investigate an employee’s discrimination and/or harassment claim. In such situations, an employer may have to decide whether to defend itself in two venues, or whether it is more cost efficient to forgo the arbitration altogether.