FAA’s Transportation Worker Exception Covers Airline Ramp Agents, U.S. Supreme Court Holds

People employed as ramp employees who ceaselessly deal with cargo for an airline are “transportation workers” exempt from the Federal Arbitration Act (FAA), the U.S. Supreme Court has held. Southwest Airlines Co. v. Saxon, No. 21-309 (June 6, 2022). Subsequently, the staff aren’t required to arbitrate their wage-hour claims beneath the FAA, however should be topic to arbitration beneath state legislation.

The FAA’s transportation employee exception excludes from FAA protection “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. In recent times, the scope of the exception — significantly its “any other class of workers” catchall provision — has emerged as a big concern at school motion litigation. On this case, the slender query the Supreme Court addressed to resolve a circuit cut up was “[w]hether workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport such goods themselves, are interstate ‘transportation workers’ exempt from the Federal Arbitration Act.”

Within the determination beneath, the U.S. Court of Appeals for the Seventh Circuit held that, although the worker didn’t personally transport items or folks in interstate commerce, she was a vital hyperlink within the interstate commerce chain and, subsequently, exempt from the FAA. The U.S. Court of Appeals for the Fifth Circuit reached the other conclusion in Eastus v. ISS Facility Servs., Inc., a 2020 case involving comparable info.

The Go well with

Latrice Saxon, a Southwest Airways cargo ramp supervisor at Chicago’s Halfway airport, introduced a putative collective motion wage go well with in opposition to her employer. Regardless of her supervisory function, she alleged that she ceaselessly carried out the work of bodily loading and unloading cargo on and off airplanes (which Southwest disputed). She filed a putative collective motion beneath the Truthful Labor Requirements Act alleging she and her fellow ramp supervisors have been entitled to extra time pay. When the airline sought to compel arbitration of her claims beneath the events’ arbitration settlement, Saxon contended she can’t be pressured to arbitrate as a result of she is a “transportation worker” exempt from FAA protection and, subsequently, the arbitration settlement was not enforceable.

The district courtroom discovered the transportation employee exception didn’t apply and compelled arbitration. The Seventh Circuit reversed, discovering the transportation employee exception utilized.

The Court’s Reasoning

The Supreme Court, in a unanimous 8-0 opinion authored by Justice Clarence Thomas, affirmed the judgment of the courtroom of appeals. (Justice Amy Coney Barrett was recused from this case and didn’t take part.)

First, the Court held that, in deciding whether or not a “class of workers” is engaged in interstate commerce for functions of the transportation employee exception, the evaluation activates the duties of the employees in query and never the corporate or business during which the employees are engaged. The justices rejected an industrywide or companywide method urged by the plaintiffs, which might broadly exempt “virtually all employees of major transportation providers.” As an alternative, the Court stated the important thing inquiry is the “actual work that the members of the class, as a whole, typically carry out.”

Second, the Court examined what it means to be “engaged in foreign or interstate commerce.” It held that the employees should be “directly involved in transporting goods across state or international borders falls within §1’s exception.” The Court decided that airplane cargo loaders are engaged in international or interstate commerce as a result of “one who loads cargo on a plane bound for interstate transit is intimately involved with the commerce (e.g., transportation) of that cargo.” The Court rejected the airline’s argument that the exception utilized solely to staff who bodily transfer items throughout states whereas on board a aircraft or different car.

Takeaway

The Supreme Court’s determination makes clear that, when figuring out whether or not employees qualify for the FAA’s transportation employee exception, what the employer (or contracting entity) does has no bearing on the evaluation. Quite, the evaluation activates the precise duties these employees carry out and whether or not these duties immediately contain interstate commerce.

On this case, the ramp supervisor who claimed to ceaselessly load and unload cargo certified for the exception. The Court, nevertheless, stated airline staff whose duties are extra faraway from the interstate move of transit (equivalent to an airline’s shift schedulers and web site designers) possible wouldn’t qualify for the exception. In a footnote, the Court likewise advised that last-mile supply drivers and meals supply drivers are “further removed” from the channels of interstate commerce and the reply wouldn’t be as clear in such case.

Equally, the Court clarified that its opinion didn’t apply to staff who solely carry out supervision of transportation employees and aren’t themselves immediately concerned in transportation of the products; it reserved that query for an additional day. Subsequently, the contours of the transportation employee exception will proceed to be litigated.

But, the opinion means that many employees within the transportation business, and employees in different industries that typically interact in interstate commerce, possible might be unable to invoke the exception to evade arbitration beneath the FAA if their function is merely tangential to the interstate move of products.

However the Court’s determination, whereas the transportation employee exception could imply an arbitration settlement just isn’t enforceable beneath the FAA, an arbitration settlement with transportation employees nonetheless could also be enforceable beneath an relevant state legislation.

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