The United States Supreme Court clarified on May 29 the scope of the Federal Arbitration Act’s (FAA) transportation worker exemption, holding that some workers performing purely intrastate deliveries may still qualify for the exemption if they are part of a continuous interstate flow of goods.
In Flowers Foods, Inc. v. Brock, the Court determined that a worker does not need to cross state lines or directly interact with interstate transportation to be considered “engaged in interstate commerce” under the FAA. The decision expands potential coverage under the exemption but also provides a clearer framework for evaluating its application.
The FAA generally requires courts to enforce arbitration agreements, but Section 1 exempts contracts of employment for certain transportation workers engaged in interstate commerce. The Supreme Court’s recent decision emphasized interpreting this provision based on statutory text and historical meaning as understood when Congress enacted the statute.
At issue was whether local delivery workers—who deliver goods only after those goods have traveled across state lines—fall within this exemption. Lower courts had disagreed: some focused narrowly on whether a worker personally crossed state lines; others took a broader view considering whether their role was part of an ongoing interstate process. The Supreme Court resolved this split by holding that participation in any segment of an uninterrupted interstate journey qualifies a worker for the exemption.
The ruling means that last-mile delivery workers can be exempt from arbitration requirements if they handle goods moving in an unbroken stream across states and play a direct, active role in completing that movement. However, not all local delivery roles will automatically qualify—the determination depends on how closely connected duties are to an ongoing interstate flow of goods.
For employers, especially gig economy platforms and logistics companies, classification and structuring of roles become increasingly important as courts will examine supply chain structures and each worker’s involvement within them. While many arbitration agreements remain enforceable where roles are removed from interstate transport, early factual analysis is key to determining applicability.
