Posts Tagged ‘Independent Contractor’

FAA § 1 | Silva v. Schmidt Baking Distribution, LLC: Second Circuit Rejects Bakery’s Creative Bid to Avoid Drivers’ FAA Section 1 Exemption

January 10th, 2026 Arbitration Agreement Unenforceable, Arbitration Agreements, Arbitration Law, Arbitration Practice and Procedure, Businessperson's FAQ Guide to the Federal Arbitration Act, FAA Chapter 1, FAA Section 1, FAA Section 4, FAA Transportation Worker Exemption, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 1, Federal Arbitration Act Section 4, Motion to Compel Arbitration, United States Court of Appeals for the Second Circuit Comments Off on FAA § 1 | Silva v. Schmidt Baking Distribution, LLC: Second Circuit Rejects Bakery’s Creative Bid to Avoid Drivers’ FAA Section 1 Exemption

FAA § 1Federal Arbitration Act (“FAA”) § 1 (“FAA § 1”) provides that “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 New Prime Inc. v. Oliveira, the Supreme Court held that, as of 1925, “contracts of employment” was not a term of art limited to employer-employee relationships, but a capacious phrase referring to agreements “to perform work,” including independent-contractor arrangements. 586 U.S. 105, 113–21 (2019). (Posts discussing FAA § 1, including New Prime, are here, here, here, here, & here.)

In Silva v. Schmidt Baking Distribution, LLC, No. 24-2103-cv, slip op. (2d Cir. Dec. 22, 2025), the U.S. Court of Appeals for the Second Circuit held that distribution agreements signed by single-worker corporate entities—entities the company required delivery drivers to form as a condition of keeping their routes—were “contracts of employment” within FAA § 1, so the FAA could not be used to compel arbitration. See Silva, slip op. at 2, 18–20.

The “transportation worker” exemption continues to generate litigation and businesses Continue Reading »

New Prime v. Oliveira Part II: Federal Arbitration Act Section One “Contracts of Employment” Exemption Includes Independent Contractors

February 1st, 2019 Applicability of Federal Arbitration Act, Federal Arbitration Act Section 1, Federal Arbitration Act Section 2, Federal Arbitration Act Section 3, Federal Arbitration Act Section 4, Statutory Interpretation and Construction, United States Court of Appeals for the First Circuit, United States Supreme Court Comments Off on New Prime v. Oliveira Part II: Federal Arbitration Act Section One “Contracts of Employment” Exemption Includes Independent Contractors
Contracts of Employment 1
Federal Arbitration Act Section 1

Section 1 of the Federal Arbitration Act (the “FAA”) exempts from the FAA’s scope disputes involving “contracts of employment of . . . workers engaged in . . . interstate commerce.”  9 U. S. C. § 1. Does the FAA apply to an agreement to arbitrate disputes between an individual trucker and an interstate trucking company if the contract between them establishes an independent contractor relationship, not an employer-employee one?

In New Prime Inc. v. Oliveira, 586 ___ U.S. ___, slip op. (Jan. 15, 2019), the United States Supreme Court said that the FAA does not apply to such contracts. That was so, the Court explained, because in 1925, the year Congress enacted the FAA, the term “contracts of employment” was ordinarily understood to include not only contracts establishing an employer-employee (or master and servant) relationship, but also independent contractor relationships. Slip op. at 7. Consequently, a court does not have authority under the FAA to stay litigation under FAA Section 3—or to compel arbitration under FAA Section 4—if the parties’ agreement evidences such a “contract of employment,” including a contract of employment that establishes an independent contractor relationship rather than an employer-employee one. Slip op. at 6, 7 & 15.

In our first New Prime post, here, we focused our discussion on a threshold issue addressed by the Court: who gets to decide whether a contract falls within Section 1’s “contracts of employment” exemption when the parties have delegated arbitrability disputes to the arbitrators? The answer to that question, we explained, is “the courts.” For the inapplicability of the Section 1 exemption is an “antecedent” question that must be resolved before the Court can conclude that it has any power whatsoever to stay litigation under Section 1 or compel arbitration under Section 4. Slip op. at 3-4. (See, also, here.)

Today we shift our focus to the merits of the Section 1 exemption question that the U.S. Supreme Court proceeded to resolve.

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