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When Can Work Be Interstate?

For many years, the question about which employees could be required to take wage disputes with their employers to third-party arbitration has hung on who among them have jobs in interstate and international transportation.

A recent Supreme Court decision has now clarified when this exemption applies under the Federal Arbitration Act, which also explicitly exempts seamen, railroad workers and truck drivers.

Confusion over the law’s language adding to the exemption “any other class of workers engaged in foreign or interstate commerce” has persisted ever since the FAA was enacted in 1947.

The unanimous decision establishes that defining which workers fall under the exemption must be based on the kind of work they do rather than whether their employers are involved in interstate or international transportation.

The Supreme Court case involved a woman who worked at Chicago’s Midway International Airport as a ramp supervisor for Southwest Airlines. She alleged that Southwest failed to pay overtime wages to her and others. She previously had agreed to submit pay disputes to an arbitrator.

The High Court upheld the view that ramp agents and supervisors are not exempt because, while they are responsible for the handling of goods, they are not responsible for the transportation of those goods across state lines.

The justices said the Southwest manager is considered to be “a member of a ‘class of workers’ based on what she does at Southwest, not what Southwest does generally.”

Attorneys for the Seyfarth Shaw law firm explain that the decision provides employers with ammunition for opposing arguments that are based on the kind of work “actually performed” as well as the connection of that work to the flow of goods across borders. As a result, the burden of demonstrating that the “transportation worker” exemption applies falls to the worker.

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