Supreme Court Closes a Loophole Employers Used to Force Intrastate and Last-Mile Drivers Into Arbitration

Flowers Foods, Inc. v. Brock, decided unanimously on May 28, 2026, makes clear that a worker does not have to cross state lines — or even touch a truck that did — to escape the Federal Arbitration Act and have his case heard in court.

The Question the Court Just Answered

If you drive a route that never leaves California, can your employer still force you into private arbitration when you sue over unpaid wages? For years, that question has divided courts, and a lot of money has ridden on the answer. The Federal Arbitration Act, or FAA, is the federal law that generally pushes workplace disputes out of the courtroom and into closed-door arbitration whenever the worker signed an agreement saying so.

But the FAA has an exception buried in its very first section. Section 1 says the law does not apply to the employment contracts of "seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Transportation workers, in other words, get to sue in real court.

The fight has always been over which workers count. A long-haul trucker who drives from Los Angeles to Phoenix is obviously a "transportation worker engaged in interstate commerce." But what about the local distributor who picks up bread baked in Oregon at a Colton warehouse and drives it to grocery stores in Riverside County, never once leaving the state? Employers have spent the last decade arguing that workers like that are purely intrastate, never engaged in interstate commerce, and therefore stuck with arbitration. The Supreme Court has now rejected that argument in plain terms.

The Facts

Angelo Brock is a Flowers Foods franchisee in the Denver area. Flowers bakes Wonder Bread, Butterscotch Krimpets, and Jumbo Honey Buns at facilities in nineteen states and then moves the products through a network of local distributors who buy the right to deliver in a particular territory. Brock picked up Flowers products from a Colorado warehouse and drove them to Colorado stores. He never crossed a state line, and he never touched a vehicle that did.

In 2022, he sued Flowers in federal court, alleging the company misclassified its distributors as independent contractors and shorted them on wages owed under the Fair Labor Standards Act and Colorado Labor Law. Flowers moved to compel arbitration based on the distribution agreement Brock had signed. The trial court refused. The Tenth Circuit affirmed that refusal. And on May 28, 2026, the Supreme Court unanimously affirmed the Tenth Circuit, with Justice Gorsuch writing the opinion.

What the Court Held

The holding is short and important. A worker who transports goods on the intrastate leg of an interstate journey can qualify for Section 1's exemption from arbitration without ever crossing state lines and without ever interacting with a vehicle that does.

The key phrase from prior cases — is that the worker must play a "direct, necessary, and active" role in moving goods across borders — survives. But that role does not require the worker himself to make the border crossing.

The Court flatly rejected what Flowers had asked for: a bright-line rule that a worker is exempt only if he personally crosses a state line or at least loads or unloads a vehicle that did.

To make the point concrete, the Court walked through a hypothetical that is worth understanding because it explains the entire logic of the decision. Imagine a bakery in State B has a contract to deliver Krimpets to a customer in State A, and the bakery hires three drivers to make the trip. Driver 1 hauls the pallets from the bakery up to the state line, drops them on his side of the border, and goes home. Driver 2 picks them up, drives ten feet across the line, sets them down, and leaves. Driver 3 picks them up in State A and delivers them to the customer's headquarters.

On the rule Flowers was proposing, only Driver 2 — the one who moved the goods a few yards over the line — would be exempt from forced arbitration. The Court called that result untenable. All three drivers played a direct, active, and necessary part in getting the bread from a point in one state to a point in another. The fact that two of them did their part entirely within a single state changes nothing.

Why the Court Reached This Result

The reasoning rests on two pillars. First, the Court went back to what the words "engaged in interstate commerce" actually meant when Congress enacted the FAA in 1925. The 1933 edition of Black's Law Dictionary defined "engage" as "take part in," "employ," or "involve" oneself in something, and defined "interstate commerce" to include "the transportation of persons or property between or among the several states."

The contemporaneous Cyclopedic Law Dictionary explained that a continuous shipment from one state to another is interstate commerce even as to the portion of the journey that takes place entirely within a single state. Nothing in those definitions, the Court said, requires the worker to be the one whose tires actually roll over a state line.

Second, the Court relied on a line of nineteenth-century cases that used the same language. In The Daniel Ball, decided in 1871, the Court held that a steamboat operating entirely within Michigan was "engaged in commerce between the States" because it carried goods bound for or arriving from other states.

The Court there explained, in language Justice Gorsuch quoted at length, that the fact that several different and independent agencies carry the goods — some acting entirely in one state, some across two or more — "does in no respect affect the character of the transaction."

Similar holdings appeared in cases involving Pennsylvania salesmen, railroad agents moving packages from train platforms to warehouses, and intrastate segments of interstate rail lines. Flowers pointed out, correctly, that those were Commerce Clause cases rather than FAA cases, and the Court conceded the distinction. But cases interpreting the very same statutory phrase, decided around the same era, are powerful evidence of what an ordinary person in 1925 would have understood the FAA's language to mean.

How This Fits the Bigger Picture

This is the fourth Supreme Court decision in recent years narrowing the universe of arguments employers can use to push transportation workers into arbitration. In New Prime Inc. v. Oliveira (2019), the Court held that "contracts of employment" in Section 1 includes independent-contractor agreements, not just traditional employee contracts.

In Southwest Airlines Co. v. Saxon (2022), the Court held that airline ramp supervisors who load cargo qualify even though they never fly. In Bissonnette v. LePage Bakeries (2024), the Court held that the exemption is not limited to workers in the "transportation industry" — what matters is the function, not the industry label. Flowers Foods now adds that geography is not dispositive either.

The intrastate-only nature of the worker's route does not, by itself, take him out of the exemption.

Read together, these four decisions tell a consistent story. The Court is steadily rejecting employer attempts to read narrow, technical limits into Section 1, and is instead asking a more functional question: does this worker play a direct, active, and necessary role in moving goods across state lines? If yes, he gets his day in court, regardless of his job title, his independent-contractor status, his industry, or whether his own truck crosses a border.

What the Court Did Not Decide — and Why That Matters

The opinion is also notable for what it expressly left open. Flowers hinted at two additional arguments but did not press them, so the Court reserved them for another day. The first is the corporate-form question: Flowers's distribution agreement was technically with an LLC that Brock owns, not with Brock personally.

Some federal courts have held that Section 1 does not apply at all when the contract runs between two business entities rather than between an employer and an individual; others have rejected that argument.

The second open question is the title-taking issue: Brock ordered, purchased, and took title to Flowers's bread before reselling it to local stores, and some lower courts have treated that as a break in the interstate flow that takes the worker outside Section 1.

Both questions will be the next battleground. Defense lawyers reading Flowers Foods are already pivoting to those arguments, because the Court left the door wide open to them. Workers and the lawyers who represent them should expect to see motions to compel arbitration repackaged around corporate form and title-passing rather than the discredited "you never crossed the border" theory.

What This Means for California Workers

California has its own strong protections against forced arbitration in the employment context, and California courts have generally been receptive to the same functional analysis the Supreme Court is now applying nationally. But the FAA exemption matters in California for a specific and important reason: when the federal exemption applies, the employer cannot use the FAA to override state-law protections or to preempt California rules limiting arbitration.

Flowers Foods expands the population of California workers who can stay in court — particularly drivers and distributors operating in the state's enormous logistics, food-distribution, parcel-delivery, and last-mile sectors.

A driver running an in-state route for a national bakery, a beverage company, or an e-commerce fulfillment operation now has a substantially stronger argument that her employment contract falls outside the FAA, even if the arbitration clause looks airtight on its face.

It does not, however, automatically void every arbitration agreement.

The employer can still argue that a state arbitration statute applies, that the worker's role is not "direct, necessary, and active" enough, or — going forward — that the corporate-form or title-taking issues defeat the exemption. The decision is a meaningful step forward for workers, not a blanket invalidation of arbitration in the transportation sector.

Arbitration, The Bottom Line

If you drive a route that stays inside California but the goods you carry originated out of state or are bound out of state, Flowers Foods v. Brock is the most important arbitration decision of the year for you.

Forced arbitration clauses in last-mile distribution agreements, franchise contracts, and independent-contractor agreements are now substantially more vulnerable than they were before May 28, 2026.

The Supreme Court has made clear, for the fourth time in seven years, that the FAA's protection for transportation workers means what it says — and that employers cannot define the exemption out of existence by drawing artificial lines at the state border.

If you have signed an arbitration agreement as part of a delivery, distribution, or driving job in California and are wondering whether it can still be enforced against you, the answer has just changed.

We can help you figure out where you stand.

The Law Offices of Eric A. Boyajian, APC represents California workers in wage, hour, misclassification, and arbitration disputes. Nothing in this article is legal advice. Every case turns on its own facts.