Delivery Driver, ABC Test, and a Shortened Arbitration Deadline
Your firm represents Luis, a 58-year-old delivery driver. From 2019 to 2024, Metro Courier paid him $1,200 per week and required him to wear a uniform, work assigned routes, and attend daily briefings; he used the company's van and scanner. Metro classified him as an independent contractor and did not pay overtime. In 2024, Metro terminated him. Luis signed an agreement stating: “Any claim arising from employment shall be arbitrated within one year of the event.” He filed a wage claim with the state agency 18 months after termination. The state Wage Protection Act defines “employee” using the ABC test: a worker is an employee unless (A) free from control, (B) performs work outside the usual course of business, and (C) customarily engaged in an independent trade. The Act voids agreements shortening the limitations period to less than three years. The agency has not decided the claim. The partner asks you to draft a memo section analyzing whether Luis's claim is timely and whether the arbitration clause bars it.
1. Under the ABC test, is Luis likely an employee? Apply each prong.
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Luis is likely an employee because Metro cannot satisfy all three prongs. Prong A asks whether the worker is free from the company's control. Metro required a uniform, assigned routes, daily briefings, and use of its van and scanner. That is substantial control over how and when Luis worked.
Prong B asks whether the work is outside Metro's usual course of business. Delivery is exactly Metro's courier business, not a separate service Luis offered to the public. Prong C asks whether Luis is customarily engaged in an independent trade. The facts show one full-time relationship, company equipment, and no evidence of other clients or a separate delivery business. Because the ABC test is conjunctive, failure on any prong makes Luis an employee; here Metro fails all three. The employer bears the burden. Luis should therefore be treated as an employee for overtime purposes, subject to any exemptions the agency may consider.
2. Is Luis's claim timely, and does the arbitration clause bar it?
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The claim is timely under the Act. Luis filed 18 months after termination, which is within the Act's three-year limitations period. The agreement's one-year arbitration deadline is void because the Act expressly voids agreements shortening the limitations period to less than three years. The agency should not dismiss on timeliness.
The arbitration clause is a separate issue. The Act does not expressly prohibit arbitration, and the FAA generally requires enforcement of valid arbitration agreements, but the one-year limit cannot be enforced. If the clause is severable, the arbitration obligation may survive; if not, the entire clause falls. The agency should determine whether it has authority to proceed and whether the matter must be stayed pending arbitration. On timeliness, Luis wins; on arbitration, the clause does not bar the claim on the one-year ground, though a court may still compel arbitration under the remaining clause.