US Supreme Court Rejects Bright-Line Rule for FAA Coverage as to Intrastate Transportation Workers

In a recent decision, the Supreme Court rejected a proposed bright-line rule that would retain Federal Arbitration Act coverage for all transportation workers who transport goods solely on the intrastate leg of an interstate journey.

On May 28, 2026, the US Supreme Court held in Flowers Foods Inc. v. Brock that “at least sometimes, a worker who transports goods on an intrastate leg of an interstate journey can qualify for” the Federal Arbitration Act’s (FAA’s) Section 1 exemption applicable to transportation workers. In a unanimous opinion authored by Justice Neil Gorsuch, the Court rejected Flowers Foods’ proposed bright-line rule that a worker must either cross state lines or interact with vehicles that do cross state lines to fall within the Section 1 exemption from FAA coverage.

The opinion is significant for companies that have arbitration agreements with intrastate drivers who carry goods coming from or going outside the state. It leaves unresolved several Section 1 coverage issues over which the lower courts have been divided regarding not only drivers but also other classes of workers who may handle goods that have moved across borders.

BACKGROUND

The FAA generally requires courts to enforce private arbitration agreements and preempts contrary state law. Section 1 of the FAA, however, excludes from the statute “contracts of employment” of seamen, railroad employees, and “any other class of workers engaged in foreign or interstate commerce.”

In recent years, the Supreme Court has addressed the scope of that exemption several times. In Southwest Airlines Co. v. Saxon, the Court applied the exemption to airline ramp workers who physically loaded and unloaded interstate cargo.[1] Brock presented a related question: whether “to be engaged in interstate commerce for purposes of §1, a worker must either cross state lines or interact with a vehicle that does.”[2]

THE FLOWERS FOODS DISPUTE

Flowers Foods is a large producer of packaged baked goods that distributes products nationwide, in part through franchisees that purchase the rights to distribute its products in particular geographic territories. Angelo Brock, a Flowers Foods franchisee in the Denver area, picked up Flowers products from a Colorado warehouse and delivered them to local stores without leaving Colorado.

In 2022, Brock filed a proposed wage-and-hour class action alleging that Flowers had misclassified drivers as independent contractors and underpaid them in violation of federal and state law. Flowers sought to compel arbitration under the FAA based on Brock’s distribution agreement, which contained an arbitration provision.

The district court denied Flowers’ motion to compel arbitration due to the §1 exemption, and the US Court of Appeals for the Tenth Circuit affirmed. Flowers petitioned for Supreme Court review, asking the Court to adopt a “bright line” rule that §1 applies only if a worker personally crosses state lines or interacts with vehicles that do.

THE SUPREME COURT’S DECISION

The Supreme Court unanimously affirmed the Tenth Circuit in a short opinion. The Court held that “[a]t least sometimes, a worker who transports goods on an intrastate leg of an interstate journey can qualify for §1’s exemption” without crossing state lines or interacting with vehicles that do.[3]

The Court began with the statutory text. Section 1 applies to “workers engaged in . . . interstate commerce,” and, when the FAA was enacted, “to ‘engage’ meant to ‘take part in’ something or to be ‘employ[ed]’ or ‘involve[d]’ in that thing,” while “interstate commerce” included “the transportation of persons or property between or among the several states of the Union, or from or between points in one state and points in another state.”

The Court explained that “[n]othing in those terms requires an individual to cross state lines or interact with a vehicle that does,” because sometimes interstate commerce “involves not just crossing state lines, but intrastate activity too.”[4] The Court reaffirmed its holding in Saxon that “§1 does not require workers to cross state lines,” and added that it also does not “turn on a game of tag with vehicles that do.”

The Court reaffirmed that a transportation worker must have “a ‘direct,’ ‘necessary,’ and ‘activ[e]’ role in moving goods across borders.” But it stated that “individuals can sometimes be direct, necessary and active participants in moving goods” from one state to another “without crossing state lines or interacting with vehicles that do,” such as when they transport goods sold through interstate contracts or transactions.

WHAT THE COURT DID NOT DECIDE

Although the Court rejected Flowers’ suggested bright-line rule, the opinion is narrow and left unresolved other issues concerning the limits of the exemption.

First, the Court did not decide whether the §1 exemption applies to Flowers’ arbitration agreement, which is with an independently operated company Brock owns rather than with Brock individually. The Court noted that lower courts have ruled differently on this question.

Second, the Court did not address Flowers’ contention that Brock ordered, purchased, and took title to Flowers’ products before selling them to local stores. The Court noted that “some lower courts have found facts like those relevant when assessing §1’s reach,” including by “focusing on whether a product has reached its ‘intended destinatio[n]’ under an interstate contract” and “holding that intrastate couriers fulfilling take-out orders made within the State are not engaged in interstate commerce.”

Third, the Court did not address “whatever other limits §1 may or may not contain,” as it only rejected the bright-line rule.[5] The limits of §1 will continue to be litigated in federal and state courts, including likely before the Supreme Court.

IMPLICATIONS FOR EMPLOYERS

The decision has immediate practical implications for companies that use arbitration agreements with delivery drivers, franchised distributors, owner-operators, and other workers who are directly, necessarily, and actively involved in moving goods from one state to another.

Employers also should consider that even if the FAA does not apply based on §1, an arbitration agreement may still potentially be enforceable under state arbitration law, depending on how the agreement is written and applicable state law. Arbitration agreements should therefore be reviewed to confirm they allow for enforcement under a state arbitration act in the event the FAA does not apply. Companies that have arbitration agreements with workers who may be considered transportation workers should also assess the impact of any anti-arbitration state laws in the event those laws are not preempted by the FAA.