SCOTUS Rules Certain Transportation Workers are Exempt from Arbitration

Many companies force their employees to sign arbitration agreements in the hope that an arbitrator will be less generous to an employee than a jury.  Worse, these arbitration agreements often require the employee to sign away their right to bring their case as a class action, which greatly reduces an employer’s chances of being held to account for widespread violations of the law, such as when an employer refuses to pay overtime to large groups of employees.  Past efforts to avoid these one-sided agreements have been thwarted by the Supreme Court, which has interpreted the Federal Arbitration Act (FAA) very broadly, allowing employers to immunize themselves from employment laws.    

However, a Supreme Court decision handed down today may allow employees in some of the fastest growing parts of the economy – warehouse and delivery workers – to take their claims to court, and pursue them as class actions.  In Southwest Airlines v. Saxon, the unanimous court decided that Southwest Airlines employees who loaded and unloaded cargo from planes are “directly involved in transporting goods across state or international borders,” and therefore exempt from the FAA under the clause in that statute which exempts “workers engaged in foreign or interstate commerce.”    The employees in that case hoped, to no avail, that the court would rule that because Southwest is in the business of interstate transportation, all Southwest employees were exempt.  Southwest for their part argued that only employees who actually transported the goods across the state lines – such as a pilot – would be exempt. 

The Supreme Court took neither position, instead holding that the cargo handlers were playing a “direct and necessary” role in the flow of good across borders and so were exempt.  What makes this decision potentially significant for the broader workforce – such as Amazon delivery drivers – is its recognition that the workers’ relationship to the goods being shipped matters, not where the workers do their jobs.  Two Federal appeals courts have already held that local package delivery drivers are also exempt from the FAA, using the same reasoning as in the Southwest decision – it is hard to see how a worker who delivers a package the “last mile” is any less engaged in interstate commerce than the worker who unloads the same package from the airplane.  Where the package sits in a warehouse awaiting delivery, the warehouse workers who sort the package should be engaged in interstate commerce too, and thus exempt from enforced arbitration.  Considering the frequently unlawful conditions in the warehouse and delivery industry, the Southwest decision could lead to many employees having their rights vindicated in court. 

However, avoiding the FAA may not be enough.  Some states have their own pro-arbitration statutes, and some employers will seek to enforce arbitration clauses using the law of a distant state with employer-friendly rules, against employers in a state with a greater commitment to justice for employees.  MSR is awaiting a decision from the court in an overtime class action against Lasership, Inc., a “last mile” delivery company, trying to enforce the Virginia arbitration statute against its employees in New York.  MSR is committed to fighting for employees in court, and holding employers accountable for forcing their employees to work long hours for illegally low pay.