Another Blow to Mandatory Arbitration: Supreme Court Further Expands Transportation Worker Exemption Under the Federal Arbitration Act to “Last-Mile” Drivers (US)
Squire Patton Boggs’ Summer Associate Addyson Fry discusses a recent United States Supreme Court decision addressing the exemption under the Federal Arbitration Act applicable to transportation workers engaged in interstate commerce.
For decades, employers have relied on arbitration agreements to manage workplace disputes efficiently and predictably. But recent United States Supreme Court decisions have steadily narrowed when those agreements can be enforced under the Federal Arbitration Act (“FAA”).
Section 1 of the FAA exempts certain “transportation workers” engaged in interstate commerce from mandatory arbitration. Once viewed as a limited carveout, through a trio of cases decided over the past few years, the Court has expanded who qualifies for this exemption, allowing more workers to bypass arbitration and bring their claims in court, raising litigation risk and costs for employers.
First, in 2019, the Court in New Prime Inc. v. Oliveira extended the exemption beyond employees to apply also to transportation workers engaged as independent contractors. Next, in 2022, the Court in Southwest Airlines Co. v. Saxon held an airline ramp worker whose job entailed only loading and unloading cargo from an airplane within a single state nonetheless qualified as a transportation worker engaged in interstate commerce for purposes of the exemption. Then, in 2024, the Court in Bissonnette v. LePage Bakeries held a worker falls under the exemption so long as their work plays a direct and necessary role in interstate commerce.
On May 28, 2026, the Court added a fourth case to the mix – Flowers Foods, Inc. v. Brock – holding that “last-mile” drivers who deliver goods originating from out of state within the borders of a single state also are exempt from mandatory arbitration agreements under the FAA.
Flowers Foods is a national producer of packaged baked goods that relies on a network of drivers to distribute its products nationwide. Brock was a worker who was tasked with delivering Flowers Foods’ products regionally within the state of Colorado. In the course of his work, he never ventured outside of Colorado’s borders, nor worked on vehicles that crossed state lines. Brock sued Flowers in federal court on wage-related claims. In response, Flowers sought to move the dispute into arbitration based on an agreement Brock previously signed under which he agreed to resolve disputes with Flowers in arbitration. Brock, however, argued that he could not be compelled to arbitrate under that agreement because he was a transportation worker engaged in interstate commerce and thus fell under Section 1’s exemption.
Writing unanimously for the court, Justice Gorsuch agreed, explaining that “a worker who transports goods on an intrastate leg of an interstate journey can qualify for Section 1’s exemption without crossing state lines or interacting with vehicles that do.” In reaching its decision, the Court relied heavily on historical interpretations of what it means to be “engaged in commerce,” focusing on the concept of the continuous movement of goods. The Court reasoned that the transportation of goods from one state to another is a continuous journey that may involve a person who never leaves the state. Nonetheless, the Court concluded these workers are a part of interstate commerce just as much as someone who physically crosses state lines. Citing Bissonette, the Court reiterated that as long as the worker plays a “direct, active, and necessary” role in ensuring the goods get from one state to the next, they are engaged in interstate commerce and qualify for the exemption.
The Court also examined how the phrase “engage in commerce” was understood at the time Congress enacted the FAA in 1925. Most significantly, in The Daniel Ball – a case from 1871 – the Supreme Court held that the interstate character of a transaction is not altered when an aspect of the transaction occurs solely within a single state. The Court explained that subsequent cases reinforced this principle. For example, a salesperson who picked up and delivered goods that came from out of state, a railroad agent who moved a package from an interstate train to a warehouse and workers involved in purely intrastate segments of an interstate railroad business all have been found to be engaged in commerce. These cases are consistent with the Court’s holding in Saxon – an exempt worker must at least play a direct and necessary role in the free flow of goods across borders, even if the worker does not themselves cross state lines in the performance of their job.
For employers, Flowers Foods means arbitration agreements covering “last-mile” drivers like Brock – drivers whose job it is to move goods to end consumers within one state (such as, for example, delivering an appliance purchased from a big-box retailer from its distribution center to the customer’s residence) – likely are unenforceable. The Court’s decision may also signal its inclination to further expand the reach of the FAA’s Section 1 arbitration exemption beyond even “last-mile” drivers. Because the Court has yet to adopt a bright-line rule defining who qualifies as a transportation worker, lower courts likely will require a fact-intensive analysis in each case.
At present, Flowers Foods leaves no clear indication of where the transportation worker exemption ends along the chain of interstate commerce. The Court did not address whether the exemption reaches all workers who handle goods in the stream of commerce, nor did it expand on what a “direct, necessary, and active” role includes. As a result, questions remain, employers can expect more challenges to arbitration agreements, and in turn, more litigation, as courts continue to analyze the scope of Section 1’s transportation worker exemption.