On June 6, 2022, the U.S. Supreme Court handed down a decision in Southwest Airlines Co. v. Saxon that will mainly affect large transportation companies. This can include Amazon and Uber, to name two. It is not uncommon for large companies like these to have arbitration agreements with employees, and now those companies cannot demand that claims for wages go directly to arbitration.
Latrice Saxon was a ramp supervisor for Southwest Airlines. She managed employees who loaded cargo, working alongside those employees for a portion of her time. Saxon believed she loaded cargo often enough to receive overtime for her work. The employer disagreed and wanted the dispute to go to arbitration. Arbitration is typically faster and less expensive for employers. Saxon wanted the right to go to court, believing she was more likely to win there.
She argued that the law exempting a “class of workers engaged in foreign or interstate commerce” from coverage under the federal arbitration act for those with Fair Labor Standards Act (FLSA) claims created an exemption from arbitration for her. The airline disagreed. Each side had arguments that the Supreme Court did not follow, choosing its own path instead. Saxon wanted the court to rule that anyone working for Southwest Airlines fit within the exemption because they worked for an airline. Southwest argued that only employees who traveled across state lines would meet the exemption. The Court looked at the work of ramp agents and supervisors who also put cargo on airplanes and determined that these workers were indeed engaged in interstate commerce. After all, they were loading the planes with people or cargo that would then cross state lines. As such, they were exempt by law from arbitrating claims, even though they had signed an arbitration agreement.
While the workers do not themselves cross state lines, they move goods or people who do. Therefore, drivers for Uber and Amazon are likely to be a “class of workers engaged in foreign or interstate commerce.” Many employers do not have employees who cross state lines and are also not engaged in interstate commerce in their daily work activities. They would likely be covered by the federal arbitration act if employers wanted to put arbitration agreements in place.
Arbitration has positive and negative effects for employers, and if you are considering this, a conversation with an attorney might prove useful. If you are a consulting or enterprise member with Employers Council, our attorneys can discuss this with you. Email info@employerscouncil.org for assistance.