The Federal Arbitration Act (FAA) provides broad preemption of state laws that seek to limit the ability of employers to compel mandatory arbitration of employee disputes. However, the FAA contains exclusions that exclude its coverage of employees in certain industries, including transportation. Last week, the Court of Appeals for the Second Circuit found that this exclusion did not apply to delivery drivers for a bakery business.
In Bissonnette c. LePage Park St. Bakeries, LLC, the plaintiffs were delivery drivers who filed a lawsuit alleging unpaid wages under federal and state law. The employer sought arbitration of the claims based on distribution agreements signed by the drivers. The district court agreed, but plaintiffs appealed that decision to the Second Circuit on the grounds that state law prohibited enforcement of arbitration agreements. As transportation workers, the plaintiffs asserted that they were not subject to the FAA’s preemption.
The Second Circuit disagreed, upholding the lower court’s decision. The court noted that the plaintiffs were in the business of selling baked goods, not transportation. The bakery charged customers the cost of the baked goods, not the transportation. On the contrary, the transportation industry generates its revenue from the cost of moving goods from place to place. In this case, the plaintiffs were members of the baking industry.
This decision differs from cases interpreting the interstate commerce provision of the Fair Labor Standards Act (FLSA). Under this law, workers who drive commercial motor vehicles in interstate commerce are exempt from overtime and minimum wage requirements, regardless of their employer’s industry. In addition to the FLSA exemption, companies outside the transportation industry that employ drivers have the option of requiring arbitration of employment claims.[View source.]