On January 31, 2022, the NAM filed an amicus brief urging the U.S. Supreme Court to reverse a Seventh Circuit decision by holding that the Federal Arbitration Act (FAA)—a national policy favoring arbitration—covers the arbitration agreement of an airport worker who never crosses state or international borders. The FAA contains an exemption for the “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” There is a deep circuit split over the scope of the residual clause—the “transportation worker exemption”—and the High Court has not yet defined who qualifies as a transportation worker.
As the NAM’s brief explains, the Seventh Circuit’s approach threatens substantial litigation costs both from future disputes over the FAA’s application and from judicial decisions that deprive businesses and workers of the benefits of the FAA. Arbitration is important to manufacturers because it encourages efficient employment practices by providing lower costs to the parties and faster results in a dispute, thus avoiding drawn-out and costly litigation. Both the plain meaning and historical context of the FAA demonstrate that only workers that engage in actual transportation across state or national borders as a central part of the workers’ job description are exempt.
Unfortunately, on June 6, 2022, the Supreme Court affirmed the Seventh Circuit's decision.