The Transportation Worker Exemption and Last-Mile Drivers

This blog post contains important information for truck drivers, delivery drivers, and other workers who are involved in interstate or international commerce.

It is the second in a series of blog posts regarding the Transportation Worker Exemption (TWE), which exempts certain workers from the Federal Arbitration Act (FAA). The TWE is important because the FAA has been found to invalidate many laws and doctrines that, before they were struck down, protected employees and consumers from unfair arbitration agreements.

However, if an employee falls within the TWE, then the FAA does not apply. That means that the laws and doctrines that protect employees and consumers are not preempted by the FAA, and the employee is free to make use of them.

The Transportation Worker Exemption and Last-Mile Drivers

After the United States Supreme Court’s decision in Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450, there is no question that workers who are actually engaged in foreign or interstate commerce fall within the TWE. That is true even if they work for a company that is not, strictly speaking, a transportation company. See Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. 246. It is also true even if they are designated as “independent contractors” or “contractor drivers.” See New Prime Inc. v. Oliveira (2019) 586 U.S. 105.

However, workers who are “intimately involved” with interstate commerce, but do not themselves cross state or national borders, may also qualify for the TWE. In California, that includes truck drivers and delivery drivers.

For example, in Rittman v. Amazon (9th Cir. 2020) 971 F.3d 904, the Ninth Circuit Court of Appeals found that Amazon’s “last-mile” delivery drivers qualified for the exemption even if the drivers themselves did not cross state lines. That is because there was no suggestion that those drivers only delivered packages that originated in the states in which they were delivered. Rather, as Amazon drivers, they carried goods that moved from one state to another and were in the stream of interstate commerce.

The Ninth Circuit reached a similar conclusion in Romero v. Watkins and Shepard Trucking, Inc. (9th Cir. 2021) 9 F.4th 1097. There, the court found that a truck driver who delivered furniture that often came from out of state was subject to the TWE even though he never crossed state lines.

Finally, in Carmona Mendoza v. Domino’s Pizza (9th Cir. 2023) 73 F.4th 1135, the Ninth Circuit found that drivers who transported ingredients from a supply center in California to pizza restaurants also in California fell within the scope of the TWE. That is because those ingredients were not modified at the supply center. Instead, they were merely repackaged. For that reason, the Carmona case was distinguishable from other TWE cases in which the goods were transformed. Cf. A.L.A. Schechter Poultry Corp. v. United States (1935) 295 U.S. 495; Immediato v. Postmates, Inc. (1st Cir. 2022) 54 F.4th 67.

Because the TWE applied to the drivers in these cases, they were not bound by the arbitration agreements that they had signed. Accordingly, they could proceed with their class and collective actions.

California truck drivers and delivery drivers have rights that other employees do not enjoy. That includes drivers who are designated as “independent contractors” or “contractor drivers.” If you have questions about your rights at work, please feel free to contact Hunter Pyle Law, PC.

The Transportation Worker Exemption and California Employees: Introduction

This blog post contains important information for truck drivers, delivery drivers, warehouse workers, airport workers, and other kinds of workers who are involved in interstate commerce. This is the first of a series of blog posts regarding the Transportation Worker Exemption (TWE) found in the Federal Arbitration Act (FAA).

The TWE is important because the FAA has been found to invalidate a number of laws and doctrines that protect employees and consumers from unfair arbitration agreements, including those that protect employees and consumers from having being forced to to give up their right to file class actions.

What is the Transportation Worker Exemption?

Generally speaking, Section 2 of the FAA provides that arbitration agreements are valid, irrevocable and enforceable. However, Section 1 of the FAA includes the following language:

“but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

(9 U.S.C. § 1)

In other words, the FAA does not apply to workers engaged in “interstate commerce.” The precise meaning of that term has been hotly contested over the past 25-plus years.

The US Supreme Court and the TWE

The United States Supreme Court has considered the TWE in a number of cases. Over the past 25 years, the Court’s rulings regarding the TWE have shifted from very conservative to somewhat better for workers.

For example, in 2001, the Supreme Court decided Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105. Applying some fancy Latin guidelines for interpreting statutes, the Court read the general phrase “class of workers engaged in … commerce” to be limited to transportation workers.

But in a pleasant surprise, in recent years the Supreme Court has been relatively good on the TWE. For example, in New Prime Inc. v. Oliveira (2019) 586 U.S. 105, the Court held that it was for judges, not arbitrators, to decide whether the TWE applies in a given case. The Court then held that the TWE extends to workers who are classified as independent contractors and not employees.

Then, in 2022, the Supreme Court decided Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450. In that case, the Court concluded that a ramp supervisor who “frequently load[ed] and unload[ed] cargo” from airplanes belonged to a “class of workers engaged in foreign or interstate commerce.” In other words, the TWE extends to workers who do not themselves actually transport goods across state or international borders.

The Saxon Court further held that a “class of workers” is properly defined based on what a worker does for an employer, “not what [the employer] does generally.” The Court then underscored that holding in a 2024 case called Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. 246.

After Saxon and Bissonnette, the test for determining whether a worker is subject to the TWE consists of two questions:

What class of workers does the worker actually belong to?
- This question focuses on the job duties of the worker, not on what the employer does generally.
Does that class of workers engage in foreign or interstate commerce?
- This question focuses on whether the worker is “intimately involved” with interstate commerce. In other words, is includes workers who do not themselves transport goods across state lines.

Developing Law Regarding the TWE

The Supreme Court’s recent holdings have given rise to a series of questions regarding the scope of the TWE, including the following:

Does the TWE apply to “last-mile drivers?
Does the TWE apply to warehouse workers?
If the TWE applies, and the FAA does not apply, then does the California Arbitration Act apply and, if so, what does that mean?
Does the TWE apply to workers who form business entities like corporations and LLCs?

These issues will be explored more fully in the next four blog posts on this topic.

If you are a driver, or a warehouse worker, or someone who works at airports or otherwise handles interstate commerce, and have questions about your rights in the workplace, please feel free to contact Hunter Pyle Law, PC, and make use of our free and confidential intake process. We can be reached at inquire@hunterpylelaw.com, or at (510) 444-4400.

“Headless” PAGA Cases: Can a worker disclaim individual PAGA claims in order to avoid arbitration?

A fascinating issue has arisen under California’s Private Attorneys General Act (PAGA): can a worker bring a “headless” PAGA case, in which she disclaims her individual PAGA claims in order to proceed in court on PAGA claims for all other workers? This issue will likely bedevil trial courts until the California Supreme Court resolves it, which, hopefully, will be soon (see below).

The headless PAGA claim question has arisen because many employers are forcing employees to sign arbitration agreements that waive their right to bring class actions. As a result, if those employees want to bring representative claims on behalf of a larger group of workers, they are left with PAGA claims for civil penalties that otherwise could only be recovered by California’s Labor and Workforce Development Agency.

Why headless PAGA claims?

Abitration of wage and hour claims may sound like a good idea: employers tout it as speedy and efficient. In reality, it is anything but. It often takes up to half a year to even select an arbitrator. Then, if that arbitrator is busy, they may not have time to hear the case for years.

Furthermore, appeals from arbitration awards are extremely limited. If a trial court judge gets a legal issue wrong, you can appeal it. If an arbitrator makes the same mistake, you are, generally speaking, stuck with it.

Finally, arbitrators’ decisions are normally binding once the case returns to the trial court. For example, in Rodriguez v. Lawrence Equipment, Inc. (October 10, 2024, 2d DCA, Division 3), the trial court compelled the plaintiff to arbitrate his individual, non-PAGA claims. The plaintiff then lost on those claims in arbitration. The employer then moved for judgment on the pleadings as to the PAGA claims, arguing that they should be dismissed. The trial court granted the motion, and the court of appeal agreed: The trial court had properly found that the arbitration award and resulting judgment precluded the plaintiff from relitigating the Labor Code violations to prove standing to maintain his PAGA cause of action.

For these reasons, many workers who have valid wage and hour claims would prefer to avoid arbitration and to proceed directly in court.

In 2023, in the case of Adolph v. Uber, the California Supreme Court considered a question raised by the US Supreme Court in Viking River Cruises, Inc. v. Moriana: does a worker who is required to arbitrate their individual PAGA claims retain standing to bring PAGA claims on behalf of the other workers? The California Supreme Court held that the answer to this question is yes. To have standing under PAGA, a worker need only meet two requirements: (1) they must have been employed by the alleged violator, and (2) they must have experienced one or more of the alleged violations. Therefore, “where plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.” 14 Cal.5th 1104, 1114.

Adolph thus opened the door to the possibility of workers bringing PAGA cases in which they only sought PAGA penalties on behalf of other workers. Numerous cases followed that explored the viability of such “headless” PAGA cases.

Recent decisions of the California Courts of Appeal

The first of these cases was Balderas v. Fresh Start Harvesting, Inc. (April 18, 2024, 2d DCA, Div. 6). In that case, the trial court, on its own motion, found that the plaintiff had not brought individual PAGA claims. The trial court therefore concluded that the plaintiff had no standing to bring PAGA claims on behalf of other workers. Division Six of the Second District Court of Appeal reversed, holding that employees can meet the standing requirements of PAGA (described above) without bringing individual PAGA claims.

If Balderas is right on this issue, then workers who wish to bring PAGA claims but have signed arbitration agreements can avoid arbitration by disclaiming any individual PAGA claims. Those workers can thus keep their non-individual cases in court, where they will be free to pursue PAGA claims on behalf of other workers.

Approximately eight months later, however, Division One of the Second District Court of Appeal disagreed with the holding in Balderas. In Leeper v. Shipt, Inc. (December 30, 2024, 2d DCA, Div. 1), the court of appeal held that every PAGA action includes both an individual PAGA claim and a representative PAGA claim because Labor Code section 2699(a) defines a PAGA claim as “a civil action brought by an aggrieved employee on behalf of the employee and other current or former employees.” The court reasoned that that “and” is important, and so a plaintiff cannot disclaim their individual PAGA claims.

If Leeper is right, then workers cannot disclaim their individual PAGA claims. If those workers have signed valid arbitration agreements, then they must pursue their individual PAGA claims in arbitration before bringing the non-individual PAGA claims in court.

Another court of appeal weighed in shortly after Leeper. In Rodriguez v. Packers Sanitation Services Ltd. (February 26, 2025, 4th DCA, Div. 1), the Fourth District Court of Appeal considered this same issue, and sided with Balderas, holding that workers can disclaim their individual PAGA claims and thereby avoid having to arbitrate their individual PAGA claims.

The Rodriguez court reached this holding by rejecting Leeper, on the grounds that the language from Labor Code section 2699(a) quoted above means only that a PAGA complaint should contain an individual PAGA claim. The court further suggested that the proper way for an employer to challenge a headless PAGA case was through a motion attacking the pleadings, not through a motion to compel arbitration.

The California Supreme Court grants review

On April 16, 2025, the California Supreme Court decided that enough was enough. On its own motion, the Court granted review of Leeper. The Court limited the issues to be briefed and argued to the following:

Does every PAGA action necessarily include both individual and non-individual PAGA claims, regardless of whether the complaint specifically alleges individual claims?
Can a plaintiff choose to bring only a non-individual PAGA action?

Interestingly, the Court denied all requests for depublication of Leeper pending review. Instead, the Court noted that the court of appeal’s decision could be cited, not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion to choose between sides of any such conflict.

What are trial courts to do?

Not surprisingly, give the disagreement between the courts of appeal, trial courts have reached different conclusions regarding headless PAGA cases.

For example, in Los Angeles County Superior Court, five judges have considered this issue. Four agreed with Leeper. One disagreed. In Santa Barbara Superior Court and Fresno Superior Court, the judges have followed Balderas. And in Alameda County Superior Court, one judge followed Leeper, compelled the individual claims to arbitration, but did not enter a stay regarding the PAGA claims of the rest of the workers.

Therefore, it is somewhat of a roll of the dice as to whether to pursue headless PAGA claims. Trial courts will almost certainly continue to disagree as to whether to allow such claims until the California Supreme Court resolves the issue.

The lawyers at Hunter Pyle Law, PC, are experts at bringing claims under PAGA. If you have a question about your rights at work, please feel free to make use of our free and confidential intake process. We can be reached at inquire@hunterpylelaw.com.

The New PAGA: Stacking, Injunctive Relief, and Heightened Penalties for Bad Actors

California’s Private Attorneys General Act (PAGA) allows workers to join together to collect civil penalties when their employers violate the Labor Code. With the rise of arbitration agreements that prevent workers from bringing class actions, PAGA plays a critical role in protecting workers by allowing them to join together in representative actions seeking such penalties.

PAGA was amended in three ways in 2024 that help workers do just that. First, it is now clear that PAGA allows “stacking,” or multiple PAGA penalties arising from the same conduct, in some circumstances. Second, PAGA now allows workers to get injunctive relief from the courts barring their employers from continuing to violate the law. Finally, PAGA provides for heightened civil penalties against bad actors.

1. Stacking

Prior to the 2024 amendments, it was unclear whether workers could stack PAGA penalties, meaning get more than one PAGA penalty for a single act by the employer. (For example, it was not clear whether workers were entitled to one or three penalties if an employer failed to credit a worker for all hours worked, resulting in unpaid overtime, a failure to provide a meal period, and an inaccurate wage statement.)

Under the new PAGA, Labor Code section 2699(h)(3)(i) now explicitly prohibits stacking of PAGA penalties for violations of sections 201-203, 204, and 226. However, by expressly stating that stacking is not available in these limited circumstances, the statute now implicitly allows stacking in other circumstances.

This is thanks to the fancy Latin phrase “expressio unius est exclusio alterius,” which provides that the express reference to one thing excludes other things. Applying that concept here, the Legislature expressly provided that stacking was not allowed in certain limited circumstances. There, it is reasonable to conclude that it is generally available in other circumstances.

2. Injunctive Relief

PAGA now allows workers to receive injunctive relief, which means a court order prohibiting employers from doing things that violate the Labor Code. See Labor Code section 2699(e)(1). This is important because injunctive relief is sometimes the only way to get employers to change their conduct. It means that PAGA can now be used more effectively to deter future violations of the law.

3. Heightened Penalties for Bad Actors

Under the new PAGA, civil penalties are increased to $200 for each aggrieved employee per pay period if the employer has been found or determined within the last 5 years by the Labor and Workforce Development Agency (LWDA) or a court to be in violation of the Labor Code provision at issue. See Labor Code section 2699(f)(2)(B). In other words, repeat bad actors will be subject to higher penalties if they continue to violate the law.

The penalties are also increased to $200 if the court determines that the employer’s conduct giving rise to the violation was “malicious, fraudulent, or oppressive.” Ibid. This new standard, which is similar to the standard for punitive damages in other contexts, will also help workers hold bad actors accountable.

Finally, PAGA penalties for employers that have failed to provide an itemized wage payroll statement are not limited by the amendments and are governed by Labor Code section 226.3: $250 per employee per violation in an initial citation and $1,000 per employee for each violation in a subsequent citation.

If you have questions about your rights under the California Labor Code or your ability to bring a PAGA claim, consider contacting an experienced wage and hour attorney today.

Public Employees, Overtime, and the Fair Labor Standards Act

Public employees in California are not covered by many of the state’s wage and hour laws. However, generally speaking, they are covered by the Fair Labor Standards Act, or FLSA. In January 2025, the United States Supreme Court clarified the burden of proof that employers must meet in order to show that employees are exempt from the minimum wage and overtime provisions of the FLSA.

In E.M.D. Sales, Inc. v. Carrera (2025) No. 23-217, the Supreme Court was faced with the following question: do employers need to meet a heightened burden of proof to show that an employee is exempt from the FLSA’s minimum wage and overtime provisions, or is such a claim subject to the “preponderance of the evidence” standard.

The Supreme Court began its analysis with the history of the FLSA, which was enacted in 1938, and pointed out that employers who claim that an employee is exempt from the act have the burden of showing that such an exemption applies. It then considered whether the district court’s holding, that in order to meet that burden, the employer had to show “clear and convincing evidence” that an employee was exempt.

The Supreme Court then noted that the FLSA did not specify the standard of proof for such exemptions. In such cases, courts normally apply the less stringent preponderance of the evidence standard. Furthermore, the Court concluded that FLSA cases of this sort did not involve constitutional rights requiring a heightened standard of proof. Finally, other workplace protections, such as discrimination claims, are subject to the preponderance of the evidence standard.

For all of these reasons, the Supreme Court concluded that the preponderance of the evidence standard applied to employers’ claims that employees are exempt from the minimum wage and overtime provisions of the FLSA. This will make it more difficult for employees, including public employees, to bring such claims going forward.

If you are a public employee with questions about your rights at work, including questions involving overtime, feel free to contact Hunter Pyle Law PC to make use of our free and confidential intake process. We can be reached at (510) 444-4400 or at inquire@hunterpylelaw.com.

Can plaintiffs bring non-individual PAGA claims to avoid arbitration?

A recent California court of appeal decision has addressed the question of whether a plaintiff can file a PAGA claim that is representative only, disavowing any individual PAGA claims, and thereby avoid arbitration altogether. In that case, Leeper v. Shift (December 30, 2024) B339670, the court held that every PAGA action includes an individual PAGA claim regardless of how it is pled by the plaintiff. As a result, that individual PAGA claim may be compelled to arbitration if there is a valid and enforceable arbitration agreement.

In Leeper, the plaintiff alleged in her complaint that she was bring a single count for “non-individual” PAGA penalties. She further alleged that because she was doing so, Shipt could not compel her claims to arbitration.

Shipt then filed a motion to compel arbitration, which the trial court denied.

The Second District Court of Appeal (DCA) reversed the trial court. The DCA looked first to the statutory language of PAGA, finding that it clearly referred to PAGA actions as being brought “on behalf of the employee and other current or former employees.” (emphasis added.) From this, the DCA concluded that PAGA actions contain both individual and representative components.

The DCA then distinguished several cases, including Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533. Some plaintiffs, including Ms. Leeper, had relied upon that case for the idea that it was possible to file non-individual PAGA claims. The Leeper court rejected that analysis, reasoning that Balderas was about standing, not the question of whether plaintiffs could bring non-individual PAGA claims.

The DCA recognized the adverse results that its holding could have: allowing PAGA claims to be forced into arbitration, resulting in the possible stay of the representative PAGA claims, as well as possible issue preclusion. This means that employers may be able to use Leeper to put representative PAGA claims on ice for significant amounts of time.

The practical impact of Leeper

The practical impact of Leeper is heightened by the California Supreme Court’s recent decision in Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664. In that case, the Court made it easier for defendants to reverse auction PAGA claims. As Justice Goodwin Liu noted in his dissent, this issue “calls for legislative attention, lest the statute’s goal of strengthening Labor Code enforcement be thwarted by settlement incentives that drive a race to the bottom.”

The attorneys at Hunter Pyle Law PC have handled many PAGA actions against employers large and small. If you have questions about your rights at work, please feel free to contact us and to make use of our free and confidential intake process.

Challenging Electronic Signatures in Arbitration Agreements

Many companies now require employees to agree to arbitration of any claims that the employee may have against the employer. They do so for several reasons: (1) Employers want to prevent their employees from bringing class actions; (2) Employers think they are more likely to win in arbitration than before a jury and that if they lose the verdict will be lower; (3) Arbitration is a great way for employers to drag out the process; and (4) Appeals from arbitration decisions are normally limited in scope.

Many such companies now use some kind of electronic on-boarding process. These processes often include an agreement to arbitrate that is so buried in other documents that the employee does not notice it. But some employees are brave enough not to sign the arbitration agreement. Accordingly, it is important to figure out at the outset of a case whether the employee actually signed an arbitration agreement. (more…)

Severing Unconscionable Terms in an Arbitration Agreement: Guidance from the California Supreme Court

Employers use arbitration agreements to try to accomplish two main things: to force employees out of court and into a form that is less favorable to the employees and to prevent employees from bringing class actions. However, employers cannot force employees to comply with arbitration agreements that are unfairly one-sided. Such agreements can be voided if they are both procedurally and substantively unconscionable.

On July 15, 2024, the California Supreme Court issued its opinion in the case of Ramirez v. Charter Communications Inc. (2024) 16 Cal.5th 478, clarifying four issues that often arise when plaintiffs are challenging arbitration agreements as unconscionable:

Whether excluding from arbitration claims that the employer is more likely to bring is unconscionable;
Whether a shortened limitations periods for filing is unconscionable;
Whether limitations on discovery such as a limited number of permitted depositions are unsconscionable; and
Whether arbitration agreements can provide for the potential of an unlawful award of attorney fees.

(more…)

PAGA and Public Entities: The End of an Era

On August 30, 2024, the California Supreme Court considered the question of whether plaintiffs could recover PAGA penalties against public entities in a case called Stone v. Alameda Health System (“AHS”).

This question had previously been addressed in a court of appeal case called Sargent v. Board of Trustees of California State University (2021) 61 Cal.App.5th 658. In Sargent, the court held that PAGA penalties could be collected against public entities if the underlying Labor Code section provided for a specific penalty (as opposed to the default penalties under Labor Code section 2699(a)).

The Supreme Court concluded, contrary to Sargent, that public entity employers are not subject to PAGA suits for civil penalties for the following reasons:

The Labor Code’s definition of “employers” did not include public entities; and
PAGA exempts public entity employers from penalties for violations of Labor Code provisions carrying their own specific penalties.

(more…)

Timing is Everything for California Whistleblowers

If you are an employee who has reported something in the workplace that you thought broke some kind of law, this article is for you.

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