Employment Litigation · Primary-source case analysis

Bissonnette: The FAA Transportation-Worker Exemption Turns on the Work, Not the Employer’s Industry

By Aneeta Mishra and Timothy Chan

Published September 11, 2026

Bakery-product distributors brought wage claims despite agreements requiring arbitration under the FAA. The Second Circuit focused on the bakery industry and held that the distributors could not invoke the Act’s exemption for transportation workers.

Section 1 focuses on classes of workers

The exemption covers employment contracts of seamen, railroad employees, and another class of workers engaged in foreign or interstate commerce. The statutory wording directs attention to what the workers do, not to the label placed on the employer’s business.

An industry requirement had no textual basis

A rule asking whether the employer earns most of its revenue from transportation could produce mini-trials about mixed business models. The Court rejected that extra condition as unsupported by the FAA or its precedents.

The exemption remains narrow

A worker still must play a direct and necessary role in the interstate movement of goods through the channels of commerce. Handling products that once traveled interstate does not automatically bring every retail or warehouse worker within section 1.

The distributors’ status remained unresolved

The Court vacated and remanded because the lower court used the wrong industry test. It did not decide whether these distributors’ delivery and sales duties actually made them members of an exempt transportation-worker class.

Key takeaways

• Examine the worker’s actual duties before invoking the FAA’s transportation-worker exemption.
• Do not condition the exemption on the employer belonging to a transportation industry.
• Trace the worker’s direct role in the interstate flow of goods.
• Separate removal of an improper test from the ultimate exemption finding on remand.