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Supreme Court Clarifies Scope of FAA’s Transportation Worker Exemption

By April 15, 2024No Comments

In a unanimous decision, the Supreme Court delivered a significant clarification regarding the applicability of the Federal Arbitration Act’s exemption for transportation workers in interstate commerce. Chief Justice Roberts, writing for the Court, emphasized that what matters is whether a worker is a transportation worker, not whether they work in the transportation industry. See Bissonnette v. LePage Bakeries Park St., LLC, No. 23-51.

The Federal Arbitration Act (FAA) mandates courts to uphold arbitration agreements but excludes arbitration contracts of certain workers engaged in foreign or interstate commerce. This exemption, established in Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), applies specifically to transportation workers, not those who are not transportation workers, but still work within the transportation industry.

Neal Bissonnette and Tyler Wojnarowski, distributors for Flower Foods, Inc., filed a lawsuit against Flowers alleging violations of wage laws. Flowers sought to compel arbitration under the FAA based on the arbitration clauses in their distribution agreements.

Bissonnette and Wojnarowski argued that they were exempt under Section 1 of the FAA as “workers engaged in foreign or interstate commerce.” The district (lower) court compelled arbitration, emphasizing that the distributors’ responsibilities extended beyond transportation. The Second Circuit affirmed, noting that the distributors were in the bakery industry, not the transportation industry.

The central question before the Supreme Court was whether a transportation worker must be employed by a transportation industry company to qualify for the arbitration exemption under Section 1 of the FAA. The Court ruled that a transportation worker need not be employed by a transportation industry company to qualify for the exemption. Instead, they can qualify if they play a crucial role in the free flow of goods across borders.

While this case continues a trend in the applicability of the transportation worker exemption, it also expands protections to a broader group of employees than before. To be sure, the Court’s decision rejects a narrow “transportation industry” interpretation of the FAA’s Section 1 exemption. This also ruling aligns with the precedent set in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), emphasizing that the focus is on the worker’s role rather than the employer’s industry.

Importantly, the decision did not determine whether the distributors in this case were transportation workers or engaged in interstate commerce; instead, the Court sent the case back to the lower court to be decided in accord with this opinion.

Employees, particularly those whose job duties and responsibilities involve transporting good across state lines, should seek counsel in the event they signed an arbitration agreement at the outset of their employment when an employment issue arises, as this ruling may open the door to a greater ability to undo these incredibly restricting agreements.

This ruling provides clarity on the scope of the FAA’s transportation worker exemption, underscoring the importance of considering the nature of the worker’s role in determining eligibility for arbitration.