The Federal Arbitration Act (FAA) turns 100 years old today.
In enacting the FAA on February 12, 1925, Congress eliminated the power of the states to require that claims be resolved in court when contracting parties instead agree to resolve their claims in arbitration. The FAA's purpose was to reverse longstanding judicial hostility to arbitration agreements, and to place arbitration agreements on equal footing with other contracts under the law.
As we celebrate the FAA's 100th birthday, we highlight three key areas in which the FAA's scope and application have come under scrutiny in recent years.
The Scope Of The Transportation Worker Exemption Remains Unclear
The FAA does not apply to employment contracts of seamen, railroad employees, and workers engaged in foreign or interstate commerce. The scope of this so-called transportation worker exemption has been a hotbed for litigation in recent years, with the U.S. Supreme Court addressing the issue in multiple decisions. The high court's decisions in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), Domino's Pizza, LLC v. Carmona, et al., 143 S. Ct. 361 (2022), and Bissonnette v. LePage Bakeries Park St., LLC, 61 U.S. 246 (2024), emphasized that the transportation worker exemption is to be narrowly construed and that, for the exemption to apply, a worker must play a direct and necessary role in the free flow of goods across borders.
In the wake of these decisions, state and federal courts are now grappling with what that means and whether warehouse workers, last-mile delivery drivers, ride-hailing drivers, and fueling technicians meet the "direct and necessary role" test. While such classes of workers bear little resemblance to the seamen and railroad employees expressly excluded from the FAA's scope, in jurisdictions hostile to arbitration, including...
