Arbitration
Tesla Yard Hostlers Are Exempt Transportation Workers Under the FAA
Updated
In Doss v. Tesla, Inc., the First District Court of Appeal held that Tesla’s “yard hostlers”—workers who move 53-foot trailers of out-of-state auto parts around the company’s factory grounds—are transportation workers engaged in interstate commerce, and so are exempt from the Federal Arbitration Act under its section 1 exemption. The court affirmed the denial of arbitration on that ground but reversed in part on related state-law issues and remanded. The opinion was certified for partial publication.
Background
Kenneth Doss, a former yard hostler at Tesla’s Fremont factory, filed a putative class action for wage and hour violations. Tesla moved to compel individual arbitration under an agreement Doss had signed that included a class-action waiver.
The job involved driving tractor trucks to move and position 53-foot trailers, which arrived from out of state carrying auto parts, from a docking area to a warehouse where the parts were unloaded for use in vehicle assembly. The hostlers worked entirely within the factory grounds and did not themselves cross state lines.
The trial court in Alameda County Superior Court denied the motion. It found the FAA did not apply because the hostlers were transportation workers, held that Labor Code section 229 made the agreement ineffective as to most claims, found the class waiver invalid under Gentry v. Superior Court, and declined to sever the waiver. Tesla appealed.
What the Court Held on the FAA Exemption
The Federal Arbitration Act exempts the employment contracts of “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Reviewing the question de novo, the court focused on the actual work the hostlers performed, as directed by recent United States Supreme Court and Ninth Circuit decisions.
The court reasoned that the trailers were instrumentalities of interstate commerce and that the goods had not “come to rest” merely because the trailers paused on factory grounds. Moving and positioning those trailers for unloading was a direct and necessary step in completing the interstate journey of the parts—preparatory work akin to the unloading the high court has already treated as within the flow of commerce.
The court rejected Tesla’s argument that the parts had reached their final destination, distinguishing cases involving locally sold or locally assembled goods. It also declined to read the “last-mile” delivery decisions as setting any bright-line “come to rest” rule.
Yard hostlers who move trailers of out-of-state goods around an employer’s grounds to facilitate unloading are transportation workers engaged in interstate commerce, and so fall within the FAA’s section 1 exemption—even though they never cross state lines.
What the Court Held on Section 229 and Severance
Because the FAA did not apply, the court turned to state law. Labor Code section 229 lets a court disregard an arbitration agreement in actions for the collection of due and unpaid wages. The court held the trial judge wrongly applied section 229 to the overtime, meal- and rest-period, and wage-statement claims, because those are not actions to collect due and unpaid wages, while affirming its application to the minimum-wage and final-pay claims.
On severance, the court held that the trial judge committed legal error in treating the class waiver as making the entire agreement unenforceable, noting that a class waiver alone does not show a systematic effort to impose an inferior forum. It remanded for the trial court to decide, in the first instance, unconscionability arguments aimed at other provisions that were briefed but not addressed.
What This Means for You
This decision holds that on-site workers who handle trailers of out-of-state goods to facilitate unloading can be transportation workers exempt from the FAA, even when they never leave the employer’s grounds. It also clarifies that Labor Code section 229 reaches actions for unpaid wages but not meal-, rest-, or wage-statement claims, and that a class waiver alone does not render an arbitration agreement unenforceable.
I write these summaries as general information about developments in California employment law. They are not legal advice and don’t create a mediator–client relationship. For guidance on a specific matter, consult a qualified attorney.