In a decision with significant implications for employers across the logistics and delivery sectors, the United States Supreme Court has materially expanded the scope of the Federal Arbitration Act's Section 1 exemption. In Flowers Foods, Inc. v. Brock, No. 24-935, decided May 28, 2026, the Court unanimously held that workers transporting goods on the intrastate leg of an interstate shipment may fall within the FAA's exemption for transportation workers, even where those workers never personally cross state lines or operate vehicles that do.
Writing for the Court, Justice Gorsuch rejected a bright-line geographic test in favor of a functional inquiry focused on whether the worker is engaged in the interstate transport of goods. Under this approach, courts must look to the worker's role within the broader stream of interstate commerce rather than the literal path traveled by the individual employee. The opinion signals a notably worker-friendly construction of Section 1 and narrows the circumstances under which employers can rely on the FAA to compel arbitration of employment-related disputes brought by last-mile transportation personnel.
The practical consequences are substantial. Companies that have historically relied on arbitration agreements and class action waivers to manage employment risk in their last-mile operations now face heightened exposure to class and collective actions in court. The ruling is particularly relevant for businesses in retail distribution, food and beverage delivery, third-party logistics, and gig-economy platforms, many of which structure their workforces around intrastate delivery models that may now fall outside the FAA's reach.
Employers operating in these spaces should consider a prompt review of existing arbitration agreements, class and collective action waivers, and worker classification practices. Where state arbitration law may provide an alternative path to enforce dispute resolution clauses, those provisions should be reviewed for adequacy. Companies should also anticipate renewed litigation challenges from plaintiffs seeking to invoke the Flowers Foods framework to defeat arbitration compulsion in pending and future disputes.
This article is provided for general informational purposes only and does not constitute legal advice. Clients facing questions about the application of the FAA Section 1 exemption to their workforce should consult counsel for guidance tailored to their specific circumstances.