On May 28, 2026, the Supreme Court of the United States ruled in Flower Foods, Inc. v. Brock that "last-mile" drivers may qualify for the Federal Arbitration Act (FAA) transportation worker exemption. The Court unanimously ruled that the transportation worker exemption can extend to cover transportation workers who deliver goods originating out of state, or "last-mile" drivers—even if those workers do not themselves cross state lines—if their work directly contributes to the interstate movement of goods. This decision, the latest in a recent series of Court decisions examining the scope of the transportation worker exemption, expands the exemption's potential reach and has key implications for employers, particularly those in distribution, logistics, e-commerce, and related sectors.
Background: What Is the FAA's Transportation Worker Exemption?
The FAA requires courts to enforce valid arbitration agreements between employers and employees, subject to certain enumerated exemptions. According to the so-called transportation worker exemption, the FAA does not apply to arbitration agreements made between employers and seamen, railroad employees, or "any other class of workers engaged in foreign or interstate commerce." In cases where the transportation worker exemption applies, courts will typically apply state law to determine the enforceability of an arbitration agreement.
The FAA itself does not explicitly define the scope of the exemption, leaving courts to fill in the blanks. Litigation surrounding the transportation worker exemption is common, so much so that the Supreme Court has taken up issues related to it several times in recent years. For example, in Southwest Airlines Co. v. Saxon, the Court held that an airline worker who loaded cargo on and off planes qualified for the exemption even though she did not travel across state lines, because cargo loaders are integral to the interstate movement of goods. Similarly, in Bissonnette v. LePage Bakeries Park Street, the Court held that even workers who do not work in the transportation industry can qualify for the exemption, as long as their work plays a direct and necessary role in transporting goods across state borders. Both decisions reflect the Court's broad yet fact-specific approach to analyzing the limits of the exemption.
The Decision: Flower Foods, Inc. v. Brock
Flower Foods arose from an action filed in 2022 against Flower Foods (Flower), a commercial producer of baked goods, by Angelo Brock, a franchisee who purchased the right to distribute Flower's goods across the Denver, Colorado area. Brock alleged that Flower underpaid him and other franchisees, in violation of several federal and state wage and hour laws. Brock, a "last-mile" driver, was tasked with picking up goods that arrived at Flower's warehouse from out of state and transporting them to retail stores along an intrastate route in Colorado. Flower moved to compel arbitration of the suit based on an arbitration clause in Brock's distribution agreement. The district court denied the motion and the Tenth Circuit Court of Appeals affirmed, both finding the transportation exemption applied.
At issue before the Supreme Court was whether Brock and other "last-mile" drivers—who only delivered goods locally, not across state lines, and who did not interact with any vehicles that transported goods across state lines—fall within the scope of the transportation worker exemption. Flower urged the Court to adopt a bright-line rule stating that a worker cannot qualify for the exemption unless that worker either (1) personally crosses state lines or (2) directly loads or unloads a vehicle that crosses state lines.
The Court refused to adopt a bright-line rule and affirmed the Tenth Circuit's decision. Specifically, the Court ruled that the transportation worker exemption does not necessarily require workers to travel across state lines, or even interact with vehicles that do, to be "engaged in interstate commerce." A worker who plays a purely intrastate role in a larger interstate journey may, "at least sometimes," benefit from the transportation worker's exemption.
To reach this conclusion, the Court employed a textual approach. The Court explained that nothing in the terms "engage" and "interstate commerce" necessarily requires that a worker cross state lines to be covered under the exemption. As defined at the time of the FAA's enactment, to "engage" meant to "take part" in something, not to complete every aspect of it. In addition, looking at both textual and historical interpretations of the Commerce Clause of the United States Constitution, "interstate commerce" referred to the continuous flow of goods across state lines, not to goods moving across isolated, state-by-state segments. Thus, the Court reasoned that the process of "interstate commerce" can include purely intrastate activity. In short, the relevant inquiry in deciding whether the exemption applies is not whether a worker crosses state lines, but rather whether the worker handled goods moving in a continuous interstate stream and played a "direct, necessary, and active role in moving goods across borders."
Key Takeaways for Employers on Arbitration Agreements After Flower Foods
In Flower Foods, the Supreme Court declined to impose a categorical limit on the transportation worker exemption. Instead, lower courts will continue to apply a functional, fact-specific analysis—centered on a worker's role in the interstate movement of goods—to determine if the exemption applies in the specific circumstances. However, uncertainty remains regarding how courts will interpret and apply the Court's "direct, necessary, and active" standard in future cases. Employers should expect continued challenges to arbitration agreements based on the transportation worker exemption, which will likely focus on the degree to which particular job duties are connected to interstate commerce and the movement of goods across state lines. The decision will likely make it more difficult for employers to enforce arbitration agreements under the FAA with respect to certain delivery, logistics, and warehousing workers who perform their work entirely within a single state.
Employers with last mile drivers or other intrastate employees who play a role in moving goods across state borders would be wise to review their arbitration agreements and policies in light of the Flower Foods decision to ensure their arbitration agreements remain enforceable. Employers may consider whether state arbitration laws provide an alternative basis for enforcement of their arbitration agreements with employees who may qualify for the transportation worker exemption and may opt to revise the choice of law provisions in their arbitration agreements or create a separate arbitration agreement for those workers likely to be governed by state law rather than the FAA. Employers may also consider revising their arbitration agreements to include additional protections, such as robust severability provisions, to reduce the risk that the entire agreement will be deemed unenforceable under the expanded scope of the FAA's transportation worker exemption.
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If your organization has questions about the Flower Foods decision, the transportation worker exemption under the FAA, or any other related issues, please contact the authors of this article or any other attorney in Venable's Labor and Employment Group.