Supreme Court Rules That “Transportation Worker” Exemption from Federal Arbitration Act Can, at Least Sometimes, Apply to Workers Who Do Not Cross State Lines and Do Not Interact with Vehicles That Do

In Flower Foods v. Brock, the Supreme Court unanimously held that a worker who transports goods on an intrastate leg of an interstate journey can, at least sometimes, qualify for exemption from the Federal Arbitration Act (“FAA”) under § 1 without crossing state lines or interacting with vehicles that do. Justice Gorsuch delivered the opinion of the Court.

Section 1 of the FAA contains an exemption which provides that “nothing” in the FAA shall be used to compel arbitration in disputes involving “contracts of employment . . . of worker[s] engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Here, Angelo Brock performed work for Flower Foods, all within the State of Colorado. When Brock sued Flower Foods, the company moved to compel arbitration pursuant to an arbitration agreement. Both the district court and the circuit court denied Flower Foods’ motion.

The question before the Court was “whether someone can qualify as a worker ‘engaged in . . . interstate commerce’ under § 1 if he never crosses state lines and never interacts with vehicles that do.” The Court found that a worker sometimes could. Beginning with the statutory text of the FAA, the Court analyzed the terms “engage” and “interstate commerce” as those terms were understood at the enactment of the FAA, and found that they do not require that an individual cross state lines or interact with a vehicle that does to be engaged in interstate commerce. Interstate commerce “involves not just crossing state lines, but intrastate activity too.”

In reaching its conclusion, the Court reaffirmed that the phrase “engage in” interstate commerce denotes a “direct,” “necessary,” and “active[e]” role in moving goods across borders. It clarified, however, that nothing in these standards dictated the bright-line requirement of crossing state lines or engaging with vehicles that do.

In one sense, Flowers Foods, Inc. v. Brock provides clarity to employers relying on arbitration agreements with workers involved in the distribution of goods that travel in interstate commerce. The decision confirms that the FAA’s §1 transportation worker exemption cannot be defeated based on the fact, taken alone, that a worker’s particular leg of the journey did not cross state lines. For employers in industries that depend on last-mile delivery networks—including food and beverage distribution, e-commerce fulfillment, and retail logistics—this means that arbitration clauses in agreements with delivery drivers who handle goods originating from out of state may sometimes be unenforceable under the FAA, regardless of whether those drivers personally cross a state border.

Employers should note, however, that the Court expressly declined to address several issues that may limit the exemption’s reach in future cases, including whether workers who operate through independently owned business entities have “contracts of employment” triggering § 1, and whether a worker who takes title to goods before delivering them to their final destination is “engaged in” interstate commerce. As a result, a case-by-case analysis will often be required to determine whether a particular employee qualifies for § 1’s exemption.