On May 28, 2026, a unanimous Supreme Court held that a driver who never leaves his state can still fall outside the Federal Arbitration Act. That matters to any California company whose drivers or warehouse crews move goods that came from out of state. If the FAA doesn’t apply, the arbitration agreement isn’t dead, but it’s governed by California’s arbitration statute instead. That swap brings back a Labor Code rule the FAA used to override, one that lets certain unpaid wage claims stay in court.
What the Supreme Court did in Flowers Foods
The case is Flowers Foods, Inc. v. Brock, No. 24-935, 608 U.S. 380 (2026). Justice Gorsuch wrote for all nine justices, and the Court affirmed the Tenth Circuit.
Angelo Brock distributes Flowers baked goods in the Denver area. He picks up product at a Colorado warehouse and delivers it to local stores without leaving the state. When he sued over pay, Flowers moved to compel arbitration. The lower courts refused, relying on 9 U.S.C. § 1, which says the FAA doesn’t apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
Flowers asked for a bright-line rule: a worker qualifies only by crossing state lines or by touching a vehicle that does. The opinion rejected it. The Court had already held, in an earlier case, that crossing state lines isn’t required. Then it added: “Nor, we now add, does § 1 turn on a game of tag with vehicles that do.”
The Court’s reasoning ran through 1920s dictionaries and old Commerce Clause cases, and it used a hypothetical about three drivers handing off a load of snack cakes at a state border. Each one, the Court wrote, “played a direct, active, and necessary part in ensuring the Krimpets got from a point in State B (the bakery) to a point in State A (the headquarters) as the contract required.”
What the Court left open, and why employers should care
The decision is narrower than the headlines. Flowers pressed only its bright-line theory, and the Court decided only that. The opinion notes two other arguments that some lower courts have accepted. One is that the company contracted with Brock’s business entity, not with Brock. The other is that Brock buys and takes title to the products before reselling them.
The Court declined to rule on either. In its words, “whatever other limits § 1 may or may not contain, we do not see how the statutory text can support that one.” That sentence comes from the opinion’s last paragraph, and it’s the most useful line in the case for employers. The opinion cites a Ninth Circuit decision, Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190 (9th Cir. 2024), as holding section 1 inapplicable to a contract between two business entities. That decision binds federal courts in California, and nothing in Flowers disturbs it.
So the defense playbook didn’t disappear. It got more fact-specific. An employer moving to compel arbitration against a delivery worker now has to fight on who the contracting party really is, where the goods’ interstate journey ended, and what the worker actually did. The fact that a driver never left California is no longer an argument by itself.
A California court has already applied it inside a factory
Two weeks later, the First District Court of Appeal applied the same reasoning to Tesla’s Fremont factory in Doss v. Tesla, Inc. (Cal. Ct. App., June 11, 2026, A173210). The opinion is certified for partial publication. Its section 1 analysis is in the published part.
The plaintiff worked as a yard hostler, moving 53-foot trailers of out-of-state auto parts from a parking area to the loading docks. He never drove on a public road for the job. The court still held the hostlers were exempt, explaining that “Tesla’s yard hostlers are exempt transportations workers” because moving the trailers was a necessary step in finishing the parts’ interstate trip. That quote comes straight from the opinion, typo included.
The court did limit its ruling. It said its “conclusion rests upon specific facts unique to interstate commerce by trucks and trailers and the particular duties of the yard hostlers in this case.” It also rejected Tesla’s warning that mailroom workers would be next. Still, any California employer with yard, dock, or shuttle drivers should assume a plaintiff’s lawyer will cite Doss.
The Labor Code 229 problem
Out-of-state commentary on Flowers mostly skips the California consequence. The FAA normally overrides a California statute that would otherwise keep wage claims out of arbitration. Labor Code section 229 says that “Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.”
In Perry v. Thomas, 482 U.S. 483 (1987), the Supreme Court held that the FAA conflicts with section 229 and that “under the Supremacy Clause, the state statute must give way.” That only works when the FAA applies. The Doss court said so directly: “Because the FAA does not apply, it does not preempt the application of Labor Code section 229.”
The agreement still has a home. California’s own arbitration statute, Code of Civil Procedure section 1281, makes written arbitration agreements “valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” Section 229 carves out only some claims, and Doss shows how far the carve-out reaches:
| Claim in Doss | Labor Code basis | Kept in court by section 229? |
|---|---|---|
| Minimum and regular wages for off-the-clock work | §§ 218, 218.5, 218.6 | Yes |
| Final pay and waiting time penalties | §§ 201 to 203 | Yes |
| Derivative UCL claim | Bus. & Prof. Code § 17200 | Yes |
| Overtime | §§ 510, 1194, 1198 | No |
| Meal periods | § 512 | No |
| Rest periods | § 226.7 | No |
| Wage statements | § 226 | No |
| Expense reimbursement | § 2802 | No |
The court in Doss followed Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676 on the rest period and wage statement claims, reasoning they aren’t actions “for the collection of due and unpaid wages.” But it parted ways with Lane on final pay claims. Doss held that a claim for unpaid wages at termination stays in court even though it also asks for waiting time penalties: “That this cause of action also seeks waiting time penalties is of no consequence.” Two published Court of Appeal opinions now disagree on that point, which tends to invite more litigation, not less.
The practical result for an exempt workforce is a split case. Some claims go to arbitration, and others stay in court, often with the court case stayed while the arbitration runs. That’s more expensive than either forum alone. It also changes settlement math, because the plaintiff’s lawyer keeps a courtroom for the off-the-clock and final pay claims that drive class exposure.
What to do before the next motion to compel
Companies with a delivery, logistics, or warehouse workforce should review their arbitration program now, not after a complaint arrives. If a claim has already been filed, start here:
- Preserve the records that decide the section 1 question: job descriptions, dispatch and route data, bills of lading or shipping records showing where goods came from, the arbitration agreement, and every version of the onboarding paperwork.
- Calendar the response deadline on the complaint or demand, and check whether the arbitration agreement names the FAA, California law, or both. Also check whether an employment practices liability (EPLI) policy needs prompt notice of the claim.
- Identify the supervisors and operations staff who can describe what the workers actually did each day, and make sure no one changes the plaintiff’s routes, hours, or assignments in a way that could look like retaliation.
- Pull the documents behind the business-entity and title arguments Flowers left open, such as distributor agreements and the invoices showing who owned the goods during delivery. The entity’s formation papers belong in the file too.
- Talk to a lawyer before filing a motion to compel, answering the complaint, or making any settlement offer. A losing motion to compel can create precedent against the company’s own program.
Flowers and Doss make arbitration of logistics claims a fact fight, and the employer with the better record usually wins it. Experienced California employment defense lawyers build that record before the motion is filed, not in reply. For the mechanics of the motion itself, see the firm’s guide to a motion to compel arbitration in California employment cases.
If your drivers or warehouse workers have sued
If your company faces a wage and hour suit from delivery drivers, dock workers, or yard crews and is weighing a motion to compel arbitration, the job records and the contract structure usually decide whether arbitration survives. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving arbitration agreements with transportation and logistics workers. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The decisions are Flowers Foods, Inc. v. Brock, 608 U.S. 380 (2026); Doss v. Tesla, Inc. (Cal. Ct. App., June 11, 2026, A173210, partially published); Perry v. Thomas, 482 U.S. 483 (1987); and Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, as discussed in Doss. The statutes are 9 U.S.C. § 1, Labor Code section 229, and Code of Civil Procedure section 1281.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.