Do airline ramp workers qualify as “transportation workers” exempt from the Federal Arbitration Act (FAA)?
The court’s decision will determine whether the workers will be able to pursue their overtime class action in Federal Court or, instead, will have to arbitrate their claims on an individual basis under an arbitration agreement with their employer.
The transportation worker exemption excludes from FAA coverage “contracts of employment of mariners, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 USC § 1. In recent years, exemption has emerged as one of the most significant issues in class action litigation, especially as employers have increasingly adopted arbitration agreements with class action and class action waivers to limit legal costs and reduce wages. and HR lawsuits have proliferated among employees and independent contractors who claim to fall under the exemption.
Here, a federal district court applied a narrow interpretation of the residual clause of the FAA exemption. He found that the exemption did not apply to a cargo runway supervisor at Chicago’s Midway Airport. The plaintiff alleged that she routinely assisted her team of ramp agents in loading and unloading air cargo that needed to be transported interstate. The district court ruled that the employee should pursue her wage claims in individual arbitration because the employee was not a “transportation worker.” The United States Court of Appeals for the Seventh Circuit (which has jurisdiction over Illinois, Indiana and Wisconsin) reversed in a March 31, 2021, decision, holding the transport worker exemption applies. The Seventh Circuit found that while the employee did not personally transport goods or people in interstate commerce, she was a vital link in the interstate commerce chain. (The United States Court of Appeals for the Fifth Circuit, which has jurisdiction over Louisiana, Mississippi, and Texas, came to the opposite conclusion in Eastus vs. ISS Facility Servs., Inc.., a 2020 case involving similar facts.)
Therefore, Southwest’s arbitration agreement with the employee was not subject to the FAA. However, the Seventh Circuit noted that the arbitration agreement could still be enforced under state law. Southwest then asked the District Court to refer the matter to arbitration under Illinois law; this decision is on hold pending appeal to the Supreme Court.
The Supreme Court agreed to review the Seventh Circuit’s decision to decide “[w]Workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport those goods themselves, are interstate “transportation workers” exempt from federal arbitration law.
Last quarter, the Supreme Court declined to review two cases dealing with whether the exemption applies to “last mile” drivers and “gig” delivery drivers who only travel intrastate, despite a lasting circuit split. the South West Airlines concerns purely stationary workers.