The U.S. Supreme Court has ruled that in determining exemption from the Federal Arbitration Act (“FAA”) for “workers engaged in foreign or interstate commerce” — commonly referred to as the “transportation worker” exemption—courts must focus on workers’ job duties rather than the industry in which they work. Bissonnette v. LePage Bakeries Park St., LLC. The ruling overturns a Second Circuit decision that held that the workers arguing exemption from the FAA did not qualify as transportation workers because they did not work in the transportation industry. The two workers were distributors of a national bakery that manufactured and marketed food products, and they spent their time delivering products in Connecticut. This new decision rejects any requirement of working in the transportation industry in order to be exempt from the FAA. However, the decision did not provide further guidance on who qualifies as a “transportation worker.”
The Court noted that the Section 1 exemption of the FAA refers to workers who are engaged in commerce and does not focus on the industry of the employer, language previously examined in Southwest Airlines Co. v. Saxon, 596 U.S. 450, (2022). In Bissonnette, the Court referred to its discussion in Saxon that transportation workers “must at least play a direct and ‘necessary role in the free flow of goods’ across borders.”
Following Bissonnette, the U.S. Supreme Court denied certiorari in two cases that also discussed the FAA exemption for interstate commerce workers: Domino’s Pizza, LLC, v. Carmona in the Ninth Circuit and C.K. Sales Co., LLC v. Canales in the First Circuit. The Domino case dealt with Domino’s pizza truck delivery drivers. The Ninth Circuit held that the workers were exempt from the FAA as transportation workers, even if they did not cross state lines. In C.K. Sales, the First Circuit also held that the drivers were exempt from the FAA.
Employers seeking to roll out or enforce arbitration agreements (and argue that the employees are not exempted from the FAA) should carefully evaluate the workers’ job duties and whether they are directly engaged in the movement of goods across state lines.