SCOTUS: FAA Transportation Worker Exemption May Apply to Drivers Who Do Not Cross State Lines

Takeaways

• In Flowers Foods, Inc. v. Brock, the U.S. Supreme Court held a worker who transports goods on an intrastate leg of an interstate journey may qualify for Section 1’s exemption to the FAA even if the worker never crosses state lines or interacts with a vehicle that does.
• The Court declined to adopt a bright-line rule requiring transportation workers to cross state lines or interact with an interstate vehicle to qualify for the exemption. However, it reaffirmed that there are limits to the exemption.
• The decision leaves key issues unresolved, meaning future litigation will shape, for instance, how broadly the exemption applies.

Related links

• Flowers Foods, Inc. v. Brock
• Defining ‘Transportation Worker’: SCOTUS (Again) Considers Scope of FAA Exemption

Article

The U.S. Supreme Court held the Section 1 transportation worker exemption to the Federal Arbitration Act (FAA), which excludes from FAA coverage transportation workers who are “engaged in foreign or interstate commerce,” may apply to transportation workers who do not cross state lines or interact with a vehicle that does. Flowers Foods, Inc. v. Brock, No. 24-935 (May 28, 2026). Because the transportation worker exemption applied, a “last mile” driver, who transported baked goods on the intrastate leg of the goods’ interstate journey, could not be compelled under the FAA to arbitrate his wage dispute against a bakery manufacturer.

The Court rejected a proposed bright-line rule requiring an individual cross state lines, or at least interact with vehicles that cross state lines, to be covered under the transportation worker exemption.

Flowers Foods Case

The case involved an independent distributor who delivered bread and other baked goods from a Colorado warehouse to retail outlets within Colorado. The goods were shipped to the warehouse from out of state by others, and the driver never crossed state lines when completing the local deliveries.

The driver’s distribution agreement with the company included an arbitration provision. The driver sued the company, and the company filed a motion asking the court to send the dispute to arbitration. A federal district court rejected the company’s motion, finding the FAA transportation worker exemption applied. The U.S. Court of Appeals for the Tenth Circuit affirmed, concluding the driver’s intrastate deliveries formed part of the interstate journey of goods shipped from out-of-state bakeries to retail destinations.

Supreme Court’s Decision

Addressing the narrow question of whether a worker performing only an intrastate segment of transportation can still be engaged in interstate commerce for purposes of the transportation worker exemption, the Court affirmed the decision below.

Looking at the text of the FAA exemption and historical precedent, the Court concluded that workers may be engaged in interstate commerce if they take part in a continuous interstate journey, even if their part of that journey occurs wholly within one state. The Court therefore declined to adopt a categorical rule that a worker must cross state lines or interact with an interstate vehicle for the exemption to apply.

The decision, however, reaffirmed that to qualify for the exemption, an individual must play a “direct,” “necessary,” and “active” role in moving goods across borders.

The Court also made clear the FAA exemption is narrower in scope than the Constitution’s Commerce Clause. The FAA exemption is limited to “transportation workers,” it said, and applies only to those “engaged in” interstate commerce — a higher standard than under the broader Commerce Clause, which applies to activities simply “affecting” or “involving” commerce.

Finally, although explaining the transportation worker exemption may apply when intrastate drivers are part of the “continuous carriage” of goods through their journey from outside the state, the Court notably left open the question of whether the exemption applies when the arbitration agreement is between two companies or to drivers who transport goods after title of the goods has already transferred within the state.

Impact of Flowers Foods

Although the Supreme Court rejected a bright-line defense against transportation worker exemption coverage, its decision does not establish that every intrastate delivery driver is exempt from the FAA. To qualify for the exemption, the driver must play a direct, active, and necessary role in a continuous interstate movement of goods.

Moreover, the Court noted scenarios in which courts have found the exemption inapplicable to intrastate drivers and, in doing so, implied that had those scenarios been properly before the Court, they may have affected the outcome. The Court did not decide, for example, whether the operative agreement in this case was a “contract of employment” — a necessary component of the FAA exemption — given that the driver operated his own independent business and delivered goods for the company pursuant to a business-to-business (B2B) distribution agreement. (The Court recently denied a petition for review that posed this very question in a case involving a similar B2B commercial arrangement.)

The Court also explicitly did not decide whether the fact that the goods changed ownership within the state had any impact on its decision, because that issue was not before the Court.

The Court concluded its decision with the following words, which portend additional litigation about the scope of the FAA transportation exemption:

The trouble is that, while Flowers discusses these facts in passing, it does not ask us to decide their legal significance. Instead, it ventures all upon one cast, asking us to adopt a bright-line rule that an individual can never qualify for §1’s exemption unless he crosses state lines or interacts with vehicles that do. And whatever other limits §1 may or may not contain, we do not see how the statutory text can support that one.

Implications

With no clear interstate “line in the sand,” companies that engage delivery drivers, distributors, or other transportation-adjacent workers cannot rely on intrastate routes alone to ensure the FAA transportation worker exemption will not apply. The analysis may turn on the full flow of goods through the supply chain, including whether local delivery is part of a continuous interstate movement and whether goods are warehoused or otherwise come to rest before delivery to the goods’ final destination.

To determine coverage under the FAA exemption, companies should review:

• How routes are assigned; 
• How goods move from out-of-state production sites to local warehouses to customers; 
• When title changes hands; and
• Whether documents consistently describe the point at which interstate movement ends.

Those details may influence how lower courts apply the Flowers Foods decision.

Companies that utilize arbitration agreements with delivery drivers, distributors, and other transportation workers also should review those agreements with an eye to relevant state arbitration laws in the jurisdictions where they operate. State laws may be essential fallbacks for enforcement of an arbitration agreement where the FAA does not apply.

Please contact your Jackson Lewis attorney if you have questions about the Court’s decision or the enforcement of arbitration agreements generally.