Supreme Court Clarifies Arbitration Exemption for Last-Mile Workers

On May 28, 2026, the Supreme Court issued its latest ruling broadening the transportation worker exemption to the Federal Arbitration Act (FAA). In a unanimous decision, the Supreme Court ruled that a transportation worker does not need to cross state lines, or interact with a vehicle that does, to be exempt from the FAA’s coverage.  Interpreting the scope of the transportation worker exemption under Section 1 of the FAA, the Court held that a “last-mile” driver who transports goods only within a single state is still moving them in interstate commerce if it is done as part of the goods’ interstate journey to their final destination.

In Flowers Foods v. Brock, the Supreme Court evaluated whether a driver who picks up the company’s products from a warehouse and delivers them to local stores without leaving the state is subject to the FAA’s transportation worker exemption.[1] The exemption is articulated in Section 1 of the FAA, and states that the FAA’s provisions requiring broad enforcement of arbitration agreements do not apply to the employment contracts of certain transportation workers, defined as “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”[2]

Flowers is a national company that distributes its products through local franchisees. The plaintiff, a franchisee and driver in the Denver area, picked up Flowers’ products from a warehouse in Colorado and delivered them to local stores. The driver sued Flowers for employment-related claims in federal district court, and Flowers moved to compel arbitration.  The district court denied the motion to compel arbitration after finding that Brock qualified for the transportation worker exemption and that the FAA did not apply.

On appeal to the Supreme Court, Flowers advanced only one argument: that the Section 1 exemption of the FAA categorically applies only when a worker either crosses state lines or interacts with a vehicle that does.  The Court rejected this argument. Instead, the Court held that a worker who transports goods on an intrastate leg of an interstate journey can be exempt. Neither the worker nor the vehicle need to cross state lines for the worker’s role to be considered part of an interstate journey.

However, the Court made clear that it addressed only this narrow argument and pointed to several other arguments that it did not address but which have found traction with lower courts. For example, the Court noted that a transfer of title in the goods could signal the end of the goods’ interstate journey and that subsequent movement within a single state would not trigger the transportation worker exemption.

The Supreme Court has long ruled that the FAA evinces a strong public policy in favor of the enforcement of arbitration agreements.  It has ruled that the FAA preempts numerous state laws designed to curtail the use of arbitration agreements by employers, and has upheld the use of class action waivers to require arbitration of employment-related claims on an individual basis, rather than collectively through a class action. These agreements have played a pivotal role in stemming the onslaught of wage and hour class action suits in recent years.

The Supreme Court has now issued four rulings since 2019, including Flowers, concerning the Section 1 exemption.  Each time, the Court has sided with employees to limit the FAA’s reach.  When the exemption applies, employers are generally relegated to seeking enforcement of their arbitration agreement under state laws, which are oftentimes more stringent than the FAA.

Employers who use arbitration agreements for workers engaged in transportation, distribution, warehousing, and delivery functions can take this latest decision as an opportunity to review their agreements in light of the likelihood that state law in the various jurisdictions they operate will apply.

[1] Flowers Foods v. Brock, 608 U.S. __ (2026).

[2] 9 U.S.C. § 1.