FAA’s “Transportation Worker” Exemption Does Not Apply to Contracts Between Businesses

After a dispute arose between Amazon and one of its "delivery service partners," Amazon sought to compel arbitration pursuant to an arbitration agreement in the companies’ contract. The district court ordered the parties to arbitrate, and the delivery service partner appealed to the Fourth Circuit Court of Appeals, arguing that arbitration was not required due to the Federal Arbitration Act’s exemption for “contracts of employment” with “transportation workers.” The Fourth Circuit affirmed and compelled the parties to arbitrate.

The FAA’s “transportation worker” exemption specifies that the statute’s arbitration mandate does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The Fourth Circuit found that the exemption did not apply here for three reasons.

First, the agreement at issue was not a “contract of employment,” as it did not promise work and compensation to an individual employee, or contain any of the hallmarks of a traditional employment contract (i.e., salary, benefits, leave time). Rather, the agreement provided for one business to provide services to another business, and furthermore, both of the parties to the contract were “sizable employers.” The transportation exemption applies to agreements with individual “workers performing work,” not businesses.

Second, the delivery service partner was not within the “class of workers” eligible to benefit from the exemption, which, again, was intended to apply to “individual workers carrying out work.” “Sizable corporate entities are not ‘similar in nature’ to the actual human workers enumerated by the text of the ‘transportation worker’ exemption, and so the arbitration clause at issue here is once again unaffected by the exemption.”

Lastly, the president of the delivery service partner was not a party to the contractual agreement with Amazon, and therefore, she could not claim that she was a “transportation worker” who had a “contract of employment” with Amazon. Here, the relevant contract from which the dispute arose (and which contained the arbitration agreement) was between two business entities. It was the delivery service partner’s status that mattered with regard to the enforceability of the arbitration agreement, not that of its president. As a result, the “transportation worker” exemption of the FAA did not apply.

Amos v. Amazon Logistics, Inc., No. 22-1748 (4th Cir. July 25, 2023).