The Federal Arbitration Act (FAA) provides broad preemption of state laws that seek to limit the ability of employers to compel mandatory arbitration of disputes with employees. However, the FAA contains carve-outs that exclude its coverage of employees in certain industries, including transportation. Last week, the Second Circuit Court of Appeals concluded that this exclusion does not apply to delivery drivers for a bakery company.

In Bissonnette v. LePage Bakeries Park St., LLC, the plaintiffs were delivery drivers who filed suit alleging unpaid wages under federal and state law. The employer moved to compel arbitration of the claims based on distributorship agreements signed by the drivers. The district court agreed, but the plaintiffs appealed this decision to the Second Circuit on the grounds that state law prohibited enforcement of the arbitration agreements. As transportation workers, the plaintiffs claimed that they were not subject to FAA preemption.

The Second Circuit disagreed, affirming the lower court decision. The court noted that the plaintiffs were in the business of selling baked goods and not transportation. The bakery charged customers for the cost of the baked goods and not for transporting them. On the contrary, the transportation industry generates its revenue through charges for moving goods from location to location. In this case, the plaintiffs were members of the bakery industry.

This decision differs from cases interpreting the interstate commerce provision of the Fair Labor Standards Act (FLSA). Under that law, workers who drive commercial motor vehicles in interstate commerce are exempt from overtime and minimum wage requirements regardless of their employers’ industry. In addition to the FLSA exemption, companies outside the transportation industry that employ drivers have the option of requiring arbitration of employment claims.