Supreme Court: Look to Worker, Not Employer for FAA Exemption Status

Employment Law

Is the exemption from coverage under the Federal Arbitration Act (FAA) for any “class of workers engaged in foreign or interstate commerce” limited to workers whose employers are in the transportation industry?

To answer the question, a court must consider what the worker does for the employer—not what the employer does generally, the U.S. Supreme Court recently held.

Neal Bissonnette and Tyler Wojnarowski worked as distributors for Flowers Foods, Inc., the second-largest producer and marketer of packaged bakery foods in the country.

Bissonnette and Wojnarowski were franchisees who owned the rights to distribute Flowers products in certain parts of Connecticut. Flowers baked the bread and buns and sent them to a warehouse; the distributors picked them up and delivered them to local shops.

They sued Flowers, alleging that they had been underpaid in violation of state and federal law. Flowers moved to compel arbitration pursuant to the distributor agreements Bissonnette and Wojnarowski had signed.

The distributors objected to arbitration, arguing that they fell within an exception found at § 1 of the FAA, which excludes “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

A district court disagreed and dismissed the case in favor of arbitration. The Second U.S. Circuit Court of Appeals affirmed.

One month after the Second Circuit’s decision, the Supreme Court decided Southwest Airlines Co. v. Saxon, where the justices held that a “class of workers” is properly defined based on what a worker does for an employer, “not what [the employer] does generally.”

Bissonnette and Wojnarowski filed a petition for certiorari and the Supreme Court granted it.

The only question before the Court: whether a transportation worker must work for a company in the transportation industry to be exempt under § 1 of the FAA.

In a unanimous opinion authored by Chief Justice John Roberts, the Court found no such requirement.

As explained in Saxon, § 1 refers to “workers” who are “engaged” in commerce, he wrote, language that focuses on the performance of work rather than the industry of the employer, and says nothing to direct courts to consider the industry of a worker’s employer.

This avoids the problem of attempting to solve “arcane riddles” about the nature of a company’s services and mini-trials on the transportation industry issue, Chief Justice Roberts said.

The justices also rejected Flowers’s contention that an industrywide link between seamen and railroad employees existed; instead, those classes of workers “are connected by what they do, not for whom they do it,” the Court said. “Section 1 refers to ‘seamen’ and ‘railroad employees’ without specifying any industry to which they must belong.”

Policy arguments were also unavailing for Flowers, as the § 1 exemption does not need an implied transportation-industry requirement to avoid a flood of litigation.

“[A] transportation worker is one who is ‘actively’ ‘‘engaged in transportation’ of … goods across borders via the channels of foreign or interstate commerce,’” the Court wrote. “In other words, any exempt worker ‘must at least play a direct and ‘necessary role in the free flow of goods’ across borders.’ These requirements ‘undermine[] any attempt to give the provision a sweeping, open-ended construction,’ instead limiting § 1 to its appropriately ‘narrow’ scope.”

Because a transportation worker need not work in the transportation industry to fall within the exemption from the FAA provided by § 1 of the Act, the Court vacated the judgment of the Second Circuit and remanded.

To read the opinion in Bissonnette v. LePage Bakeries Park Street, click here.

Why it matters

Relying heavily on Saxon, the Supreme Court clarified that for exemption under § 1 of the FAA, an employee does not have to work for a company in the transportation industry. Instead, the analysis turns on what a worker does for an employer, not what the employer does generally.



pursuant to New York DR 2-101(f)

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