The U.S. Supreme Court is set to clarify the scope of the "transportation workers exemption" to the Federal Arbitration Act (FAA), a decision that could have broad implications for many businesses, including those in the gig economy.
The case, Flowers Foods Inc. v. Brock, will determine whether local delivery drivers who handle goods which previously crossed state lines are exempt from mandatory arbitration.
Under the FAA, employment contracts typically require binding arbitration. However, Section 1 of the act exempts "seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."
In 2024, the Supreme Court ruled in Bissonnette v. LePage Bakeries Park St. LLC that this exemption is based on the work an employee performs, not their employer's industry. This left a critical question unanswered: Does the exemption apply to workers who operate only locally, like last-mile delivery drivers, but handle goods that have moved through interstate commerce?
The case now before the Supreme Court involves Angelo Brock, a distributor for Flowers Foods, who delivered products from a Colorado warehouse to customers within Colorado. He never crossed state lines himself. Brock filed a class-action lawsuit alleging misclassification as an independent contractor, and Flowers Foods moved to compel arbitration.
A federal district court and the 10th U.S. Circuit Court of Appeals both sided with Brock, ruling that he was engaged in interstate commerce...
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