Two recent US Supreme Court cases have made it easier for some workers to avoid having to arbitrate disputes with their employers.
The Federal Arbitration Act allows employers of most workers to require arbitration of disputes between employers and workers. However, the FAA does not “apply to contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce.”
In Bissonnette et. al v. LePage Bakeries Park St. LLC, 601 U.S. ___ (2024), Neal Bissonnette delivered Wonder Bread and other baked goods to stores in Connecticut for a large commercial bakery. As a franchisee, he had purchased a territory where he could arrange for products for display to stores he located in his service area. The contract Bissonnette signed to buy his territory included a clause that required him to arbitrate any legal dispute with the bakery.
Bissonnette believed that he should have been paid overtime, and he objected to certain deductions in his wages that the bakery took. The bakery took the position that he had to arbitrate the claim. Bissonnette said he was a worker engaged in interstate commerce and, therefore, exempt from the arbitration requirement. The employer responded that Bissonnette was engaged in the “bakery” business, and not interstate commerce.
The unanimous Supreme Court decision, written by Chief Justice Roberts, did not explore the status of Bissonnette’s “employment,” or whether Wonder Bread was engaged in “interstate commerce,” or whether the franchise agreement that Bissonnette signed contained an enforceable arbitration clause. The Supreme Court said it faced the question of whether to focus on the nature of the individual’s work, rather than the nature of the employer’s work. Relying on a 2022 decision regarding a ramp supervisor for Southwest Airlines, Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), the Court’s decision emphasized the nature of the work that the worker performs, rather than the business that the employer believes itself to be in. Thus, the critical factual question to be considered is whether the employee is “actively” engaged in transportation of goods across borders via the channels of foreign or interstate commerce. An exempt worker, the Court said, “must at least play a direct and necessary role in the free flow of goods across borders” for the FAA exception to arguably apply.
Please contact a member of our Employment Law group if we can assist with the drafting or potential enforcement of an arbitration agreement.
