Supreme Court Expands Scope Of FAA Transportation Exemption

June 3, 2026

What's New

In Flowers Foods, Inc. v. Brock, the U.S. Supreme Court held that the Federal Arbitration Act’s (FAA) Section 1 exemption for workers “engaged in interstate commerce” can apply to workers who perform deliveries entirely within one state when those deliveries are part of a continuous interstate movement of goods. The FAA does not compel enforcement of arbitration agreements for workers who fall within a statutory exception.

What It Means

The decision adopts a broader, functional interpretation of the “interstate commerce” exemption, focusing on the worker’s role in the interstate flow of goods rather than whether the worker personally crosses state lines or interacts with interstate transportation. As a result, more workers—including “last-mile” drivers—may fall outside the FAA and avoid mandatory arbitration.

The Court declined to adopt a bright-line rule, leaving room for continued litigation over the exemption’s boundaries. Future disputes will likely focus on whether a worker’s duties are sufficiently connected to the interstate transportation process.

What You Should Do

Employers should review arbitration agreements covering workers in transportation, logistics, and distribution roles and assess whether those workers may fall within the expanded exemption. Employers with transportation-related workers that wish to enforce arbitration agreements should monitor ongoing developments as courts apply the decision in different factual contexts.

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