On June 6, 2022, a unanimous United States Supreme Court issued one other key determination decoding the Federal Arbitration Act (“FAA”) that can have a big impression on sure employers going ahead. In Southwest Airlines Co. v Saxon, the Court held that the airline’s cargo ramp supervisors have been exempt from the FAA as they have been a “class of workers engaged in foreign or interstate commerce.”
The FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from protection. 9 U.S.C. § 1. The Supreme Court beforehand held that the phrase “any other class of workers engaged in foreign or interstate commerce” applies solely to “transportation workers.” Circuit Metropolis Shops v. Adams, 532 U.S. 105, 119 (2001).
Plaintiff Latrice Saxon labored as cargo ramp supervisor and introduced a putative collective motion towards her employer for allegedly unpaid extra time wages. Saxon’s employment contract contained a provision through which she agreed to arbitrate any wage disputes on a person foundation. When the airline sought to compel arbitration of her declare, Saxon contended that the settlement was unenforceable as a result of she was exempt from FAA protection as a “transportation worker.” Particularly, Saxon alleged that cargo ramp supervisors often bodily loaded and unloaded cargo on and off airplanes.
In reversing the district court docket, the U.S. Court of Appeals for the Seventh Circuit held that Saxon’s purported job duties positioned her and her fellow cargo ramp supervisors within the class of “transportation workers” exempt from the Act. In an identical case, the U.S. Court of Appeals for the Fifth Circuit reached the alternative conclusion. The Court granted certiorari to resolve this break up of authorities. See e.g. Eastus v. ISS Facility Services, Inc., 960 F. 3d 207 (fifth Cir. 2020).
Supreme Court Holding
In her briefing and oral argument earlier than the Supreme Court, Saxon advocated for an industry-wide utility of the “transportation worker” exemption that might cowl all airline workers no matter their job duties. The Supreme Court rejected this view stating that the important thing inquiry is to determine “the actual work that the members of the class, as a whole, typically carry out.”
The employer argued for a narrower view that might solely apply the exemption to workers who bodily accompany the cargo throughout borders. The Supreme Court rejected this studying of the Act as too slender. Equally, the Supreme Court rejected the argument that the FAA’s statutory function overrode what it seen because the “plain text” of the statute exempting cargo loaders.
In the end, the Supreme Court held that Saxon fell throughout the relevant “class of workers” as a result of plaintiff’s alleged job duties repeatedly concerned loading and unloading cargo that might be transported throughout state traces and the report didn’t mirror conflicting proof on this level. The Supreme Court then went on to carry that the act of loading and unloading cargo from planes constitutes interstate commerce as a result of it’s important to truly transporting cargo via interstate commerce. As such, Saxon and different cargo ramp supervisors have been exempt from FAA protection.
The Saxon determination makes clear that the FAA doesn’t exempt “virtually all employees of major transportation providers.” Moderately, the appliance of the “transportation worker” exemption activates the day-to-day actions of the employees themselves. The Supreme Court indicated that the “transportation worker” exemption wouldn’t apply to employees whose job duties are “further removed” from the channels of interstate commerce. As such, the precise contours of the “transportation worker” exemption can be decided by additional litigation.
Whereas this determination implies that sure arbitration agreements with transportation employees might not be enforceable beneath the FAA, such agreements could be enforceable beneath state arbitration statutes. As a result of this challenge remains to be growing, we are going to proceed monitoring developments on this space and supply updates as new info turns into obtainable.