Transportation workers need not cross state lines to qualify for the Federal Arbitration Act’s mandatory arbitration exemption if they are part of a continuous interstate flow of goods, the Supreme Court ruled May 28.
In Flowers Foods v. Brock, the Supreme Court held that the FAA’s Section 1 exemption for workers “engaged in interstate commerce” can apply to workers who perform deliveries entirely within one state when those deliveries are part of a continuous interstate movement of goods. The decision adopts a broader, functional interpretation of the “interstate commerce” exemption, focusing on the worker’s role in the interstate flow of goods rather than whether the worker personally crosses state lines or interacts with interstate transportation. As a result, more workers — including “last-mile” drivers — may fall outside the FAA and avoid mandatory arbitration.
The Court declined to adopt a bright-line rule, leaving room for continued litigation over the exemption’s boundaries. Future disputes likely will focus on whether a worker’s duties are sufficiently connected to the interstate transportation process.
Members of the Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, can read more here.