Why It Matters
The Supreme Court has significantly broadened who qualifies for an exemption from mandatory arbitration under the Federal Arbitration Act.
In a May 28 decision in Flowers Foods, Inc. v. Brock, the Court held that transportation workers can escape forced arbitration even when they work entirely within a single state, according to a recent Congressional Research Service (CRS) report.
The ruling means workers transporting goods on intrastate legs of interstate journeys, including last-mile delivery drivers, may now litigate employment disputes in court rather than face mandatory arbitration. Multiple bills in the 119th Congress seek to limit or bar forced arbitration more broadly in employment contexts.
The Big Picture
The Federal Arbitration Act, enacted in 1925, generally requires courts to enforce arbitration agreements. But Section 1 of the law excludes employment contracts of transportation workers engaged in interstate commerce, allowing those workers to sue instead.
The company, one of the nation's largest commercial bakeries with operations in 19 states, sought to compel Angelo Brock into individual arbitration under a distributor agreement. Brock had picked up baked goods from a Colorado warehouse and delivered them to local retailers entirely within the state, then sued alleging worker misclassification and underpayment. The Supreme Court unanimously held that a worker transporting goods on an intrastate leg of an interstate journey can qualify for the exemption without crossing state lines or interacting with vehicles that do.
Justice Neil Gorsuch's opinion reaffirmed that the phrase "engaged in interstate commerce" requires a direct, necessary, and active role in moving goods across borders. But the Court stopped short of fully defining that standard, emphasizing it did not address unresolved questions, such as the significance of transferring title to goods shipped across state lines.
The Bottom Line
The decision leaves the exemption's outer boundaries deliberately vague, creating ongoing uncertainty for employers and workers alike. At least sometimes, workers who never cross state lines can invoke the exemption, but courts will need to resolve thorny line-drawing questions on a case-by-case basis.
Congress is responding: multiple bills pending in the 119th Congress would limit or bar forced arbitration more broadly, including the FAIR Act (H.R. 5350) and the Protecting Older Americans Act (H.R. 5115), which would give plaintiffs the right to invalidate pre-dispute arbitration agreements in age discrimination cases.
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