On April 12, 2024, in Bissonnette et. al, v. LePage Bakeries Park St., LLC, et. al, the U.S. Supreme Court provided guidance on the transportation worker exemption under Section 1 of the Federal Arbitration Act (FAA), unanimously holding that a worker does not have to work in the transportation industry to qualify for the exemption. Employers with arbitration agreements should review both the employees’ duties and the agreements now to determine if they are still enforceable.

Distributors sue bakery for right to litigate claims in court

Flowers Foods, Inc. is the nation’s second-largest producer and marketer of packaged bakery foods. Those baked goods, which include tortillas, bagels, snack cakes, and Wonder Bread and Sunbeam Bread products, are delivered to retail outlets nationwide using a network of distributors.

The plaintiffs in this case, Neal Bissonnette and Tyler Wojnarowski, owned the rights to distribute Flowers’ products to retail stores in parts of Connecticut — a job that they later claimed required them to work a least 40 hours each week to complete. Under the terms of their distributor agreement with Flowers, any disputes were to be arbitrated under the Federal Arbitration Act.

After Bissonnette and Wojnarowski filed suit in federal court against Flowers alleging violations of state and federal wage laws, the company moved to compel arbitration, arguing the governing contract over the parties required them to arbitrate their claims rather than litigate them in court.

Generally, the FAA provides that arbitration agreements are valid; however, there is an exception under Section 1 for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Bissonnette and Wojnarowski argued they fell within that exception because they were “part of a class of workers engaged in commerce” and, therefore, could not be compelled to arbitrate their claims under the FAA.

The trial court dismissed the case in favor of arbitration. The Second Circuit Court of Appeals affirmed, ruling that the exemption was available only to workers in the transportation industry and did not apply to Bissonnette and Wojnarowski because they were in the bakery industry. The U.S. Supreme Court granted certiorari and considered whether a transportation worker must work for a company in the transportation industry to be exempt under Section 1 of the FAA.

Unanimous ruling focuses on performance of the work

Chief Justice Roberts delivered the unanimous opinion, holding that there is no requirement for a transportation worker to work for a company in the transportation industry to be exempt from arbitration. The court reasoned that the language of Section 1, which refers to “workers who are engaged in commerce,” focuses on the performance of the work rather than the industry of the employer. Flowers argued that without an implied transportation industry requirement, the exemption would sweep too broadly. However, the court held that the exemption is not defined in such limitless terms because “any exempt worker must at least play a direct and necessary role in the free flow of goods across borders.” Moreover, it is not enough that an employee works for a company generally engaged in interstate commerce, but the employee must be actively engaged in the transportation of goods across borders in interstate commerce. The court reasoned this requirement limits Section 1 of the FAA to its appropriately narrow scope.

Notably, the court did not express an opinion in favor of arbitration or whether Bissonnette and Wajnarowski were transportation workers within the meaning of Section 1 of the FAA, but remanded the case for further proceedings consistent with their opinion.

Employer takeaways

Under Section 1 of the Federal Arbitration Act, employers that have implemented arbitration programs cannot compel arbitration simply by arguing they are not in the transportation industry. Instead, employers’ arguments should focus on the work performed by the employee. This could require employers to take a detailed look at specific employee duties to ensure there are no exemptions.

Finally, employers should inspect their arbitration agreements to mitigate against any exemptions applying, such as potentially including applicable state arbitration law language if the FAA is determined not to apply to certain employees.

• Bissonnette et. al, v. LePage Bakeries Park St., LLC, et. al, 601 U.S. ___ (2024)