The Transportation Worker Exemption: What it is, why it matters, and what we can learn from two 2024 cases addressing it.

In recent years, many employers have sought to shield themselves from class actions, as well as individual claims of all sorts, by requiring their workers to sign arbitration agreements. These agreements usually bar any kind of collective action. They also require workers to proceed in arbitration forums rather than in court. The reason for this development is clear: Employers want toicon-gavel avoid class actions. They also want to avoid being accountable to a jury and/or a judge. Instead, they would rather have any claims made against them decided by an arbitrator whom they pay for.

One of the main reasons that employers can get away with this tactic is that the Federal Arbitration Act (FAA) provides generally that arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U. S. C. § 2. This clause largely prevents states from limiting the scope of arbitration agreements. See, e.g., Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360 (holding that Gentry v. Superior Court (2007) 42 Cal.4th 443 was abrogated by United States Supreme Court precedent interpreting the FAA).

However, due to historical reasons not explored here, the FAA provides that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U. S. C. § 1. This is known as the transportation worker exemption. Generally speaking, workers who fall within the scope of that exemption are not required to arbitrate claims against their employers.

Over twenty years ago, the U.S. Supreme Court limited the scope of the transportation worker exemption in a case called Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001). In that case, the plaintiff had argued that section 1 of the FAA exempts all contracts of employment, regardless of what a worker does. The Supreme Court rejected that argument, holding instead that  the general phrase “class of workers engaged in … commerce” is “controlled and defined by reference to” the specific categories “seamen” and “railroad employees” that precede it. 532 U.S. at 115.

In other words, the transportation worker exception must be interpreted narrowly, limiting its applicability to the contracts of workers who are similar to “seamen” and “railroad employees.”

More recently, however, this tide seems to have turned a bit in favor of workers. In 2019, the Supreme Court held that the exemption’s reference to “contracts of employment” applies both to employer-employee agreements and to agreements with independent contractors. See New Prime Inc. v. Oliveira (2019) 586 U.S. 105, 116. Then, in 2022, the Supreme Court held that the transportation worker exemption applied to a worker who loaded and unloaded cargo from airplanes that travelled in interstate commerce. Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450, 463.

2024 has brought more good news for workers regarding the exemption, both from the Supreme Court and from the Ninth Circuit Court of Appeals.

Ortiz v. Randstad
First, in Ortiz v. Randstad Inhouse Services, LLC (9th Cir. 2024) 95 F.4th 1152, 1161–1162, the Ninth Circuit applied the test set forth in Saxon and concluded that a worker who performed warehouse work in California was covered by the exemption. In that case, the plaintiff’s job duties included exclusively warehouse work: transporting packages to and from storage racks, helping other employees in obtaining packages so they could be shipped, and assisting another department with preparing packages for their subsequent shipment. The court noted that the plaintiff was not involved in unloading shipping containers upon their arrival or loading them into trucks when they left the warehouse.
Turning to Saxon‘s second step, the Ninth Circuit found that the district court had correctly concluded that the plaintiff’s class of workers “play[ed] a direct and ‘necessary role in the free flow of goods’ across borders” and “actively ‘engaged in transportation’ ” of such goods. The plaintiff handled Adidas products near the very heart of their supply chain. In each case, the relevant goods were still moving in interstate commerce when the employee interacted with them, and each employee played a necessary part in facilitating their continued movement.
Accordingly, the Ninth Circuit concluded that the plaintiff’s job description met all three benchmarks laid out in Saxon: he fulfilled a small but nevertheless “direct and necessary” role in the interstate commerce of goods by ensuring that goods would reach their final destination by processing and storing them while they awaited further interstate transport. He was also “actively engaged” and “intimately involved with” transportation: he handled goods as they went through the process of entering, temporarily occupying, and subsequently leaving the warehouse—a necessary step in their ongoing interstate journey to their final destination.
He was therefore actively engaged in the interstate commerce of goods. So the exemption applied and he was free to bring his class action claims against the defendant.
Bissonnette v. LePage Bakeries Park St., LLC
Then, in April 2024, a unanimous Supreme Court clarified that a transportation worker does not have to work for a company in the transportation industry to be exempt under section 1 of the FAA. Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. –, 144 S.Ct. 905, 909. In that case, the plaintiffs delivered baked goods made by Flowers Foods (which makes Wonder Bread, among other things). The Second District Court of Appeals held that the plaintiffs were in the “bakery industry” not the transportation industry. The Supreme Court rejected that analysis, holding instead that what mattered was what the plaintiffs actually did.
These cases help to clarify which types of workers are exempt from the FAA which, as discussed above, would generally allow them to bring class actions and other types of claims in court. If you have questions about your rights at work, please feel free to contact Hunter Pyle Law and to make use of our free and confidential intake process. We can be reached at (510) 444-4400, or at