Transportation Workers and the FAA §1 Exemption: When California Law Governs Instead
Class Action Defense
If your California workforce includes drivers, warehouse employees, delivery workers, or other employees who move goods across state lines, January 1, 2027 matters for your arbitration strategy.
AB 2155 amends California Code of Civil Procedure §1281 so that an arbitration agreement is unenforceable under the California Arbitration Act to the extent it is unenforceable under the Federal Arbitration Act. That eliminates the state-law fallback employers previously could use when the FAA's Section 1 transportation-worker exemption applied.
The practical question is now whether a particular worker falls within that federal exemption. Recent cases involving warehouse workers, bakery distributors, railcar repair workers, and airline customer-service employees show why job titles alone are not enough.
Here's what AB 2155 changes, how courts are defining transportation workers, and what California employers should review before January 1, 2027.
Key Takeaways
AB 2155 (signed June 30, 2026, effective January 1, 2027) makes California arbitration agreements unenforceable under state law to the extent they'd be unenforceable under the FAA, closing the state-law fallback for transportation workers and EFAA-covered claims.
The law's "any exclusions" language may extend beyond the two named exemptions, and courts haven't yet decided how far it extends.
Recent case law is genuinely mixed: warehouse workers and a bakery's delivery drivers have qualified as transportation workers, while rail maintenance staff and airline customer-service agents handling luggage have not.
A voluntary arbitration program can reduce exposure to AB 2155's core problem, since it isn't a mandatory agreement imposed on an exempt worker.
Losing arbitration as a forum doesn't end your defense. You can still challenge class certification and PAGA claims independently.
What Does the FAA Section 1 Exemption Exclude?
Section 1 of the Federal Arbitration Act carves out "seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" from the FAA's arbitration mandate entirely. If a worker qualifies, you can't compel them into arbitration under federal law, period.
Until now, California employers had a workaround: even when the FAA didn't apply, the California Arbitration Act didn't recognize this exclusion, so some employers still compelled arbitration under state law instead. As of January 1, 2027, that workaround is gone.
Is Your State-Law Fallback Disappearing?
Yes. On June 30, 2026, Governor Newsom signed AB 2155, adding a new subdivision (b) to Code of Civil Procedure §1281: an arbitration agreement is now unenforceable under the CAA "to the extent" it would be unenforceable under the FAA.
Before this law, an employer could concede the FAA's Section 1 exemption applied and still compel arbitration under state law, since the CAA had no equivalent transportation-worker carve-out. AB 2155 closes that door specifically and by name. The bill's stated purpose is to incorporate "any exclusions" under the FAA into California law, expressly naming two:
The FAA's transportation-worker exemption (Section 1)
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), meaning employees with covered harassment or assault claims can litigate in court despite a signed arbitration agreement, with no state-law argument left to compel arbitration anyway
Several employment law firms have noted that "any exclusions" is broader language than just these two named examples, and courts haven't yet decided how far AB 2155's incorporation actually extends. Treat the two named exclusions as a floor for your risk assessment, not a ceiling.
Which Workers Qualify as "Transportation Workers"?
Courts apply a framework from the U.S. Supreme Court's Southwest Airlines Co. v. Saxon (2022): First, the court defines the relevant "class of workers" based on the actual work that members of the class typically perform. Second, the court determines whether that class is engaged in foreign or interstate commerce. A transportation worker must play a direct and necessary role in the free flow of goods across borders.
Case | What the court decided | Employer takeaway |
|---|---|---|
California warehouse workers were exempt transportation workers under §1. | Warehouse work can qualify when workers play a direct role in moving goods through interstate commerce. | |
The FAA exemption is not limited to employees of transportation-industry companies. The Court did not decide whether the plaintiffs themselves qualified. | Employer industry alone does not determine §1 status. | |
A railcar repairman was not a transportation worker because his work on out-of-service freight cars was too removed from actual transportation. | Transportation-adjacent work is not automatically exempt. | |
The district court used the wrong class definition by focusing on the individual plaintiffs rather than the class as a whole. The case was remanded. | Analyze the typical work of the relevant class, not merely the individual employee's occasional duties. |
The boundary between transportation workers and workers whose connection to interstate commerce is more attenuated remains highly fact-specific. Recent decisions involving warehouse workers, railcar repair workers, and airline customer-service employees illustrate why employers should evaluate actual job duties rather than rely on titles alone.
Watch: Signed Arbitration Agreement = No Court? NOT ALWAYS. - a direct explanation of why AB 2155 means even a properly signed agreement doesn't guarantee arbitration for every employee or every dispute.
Is Your Arbitration Agreement at Risk?
Your exposure is worth a closer look if any of these apply to your business:
Workers physically move goods through an interstate supply chain. Delivery drivers, warehouse staff, and logistics coordinators are the clearest examples
Your agreement was drafted before Saxon (2022) or Bissonnette (2024) and hasn't been reviewed since
The arbitration clause sits inside a handbook rather than as a standalone signed document
Transportation-adjacent roles like mechanics, loaders, and repair technicians have never been individually evaluated for exemption status
You've relied on the CAA as a fallback specifically because you weren't confident the FAA applied
If your business has faced enforceability challenges specific to how the agreement was drafted or presented, separate from the transportation-worker question, our guide on Fuentes v. Empire Nissan and arbitration agreement enforceability covers that related but distinct line of attack courts are applying this year.
What Employers Are Asking About Arbitration Agreements
The practical employer question is not simply whether an arbitration agreement can be signed. It is whether the agreement will actually give the business a workable alternative to court when a dispute arises.
In a discussion on r/smallbusiness, a California employer considering an arbitration agreement asked whether arbitration would reduce litigation exposure or instead make disputes more expensive.
The discussion is not legal authority, but it highlights a practical issue that matters more after AB 2155: an arbitration agreement is only useful to an employer if it is enforceable for the particular worker and claim at issue.
For employers with transportation-related workforces, that means the analysis cannot stop at whether an employee signed an agreement. Employers should also know:
whether the FAA applies to that employee's employment agreement;
whether the employee falls within the Section 1 transportation-worker exemption;
whether the California Arbitration Act can independently support enforcement after January 1, 2027;
whether the agreement contains provisions that depend on a CAA fallback; and
what litigation strategy remains available if arbitration cannot be compelled.
Reddit discussions should not be treated as legal authority. But employer questions like these are useful because they show the operational issue behind the legal rule: before relying on arbitration as a litigation strategy, employers need to know whether the agreement will actually be enforceable for the workforce in question.
What Should You Do Before January 1, 2027?
1.
Map which of your workers could plausibly fall within the transportation-worker exemption,
not just obvious drivers, but warehouse, logistics, and support roles that recent case law has swept in unexpectedly.
2.
Don't assume support and repair roles are automatically excluded.
Vela found rail maintenance workers didn't qualify, but that outcome turned on specific facts. A different role with different duties could go the other way.
3.
Review your agreement's structure,
not just its content. A standalone document that references both the FAA and CAA, with a properly drafted class and PAGA waiver, holds up better than one embedded in a general handbook.
4.
Consider whether a voluntary arbitration program reduces your risk.
Since AB 2155's core problem is that a mandatory agreement becomes unenforceable for exempt workers, a genuinely voluntary program sidesteps part of that exposure entirely, because the worker chose arbitration rather than being compelled to it.
5.
Confirm your understanding of "any exclusions."
Given the unresolved scope question, don't assume your agreement is safe just because it addresses the two named exclusions. Build in flexibility for how courts might extend this further.
6.
Plan your defense strategy for claims that end up in court regardless.
Losing the arbitration forum doesn't end your defense. Class certification still requires numerosity, commonality, and adequate representation, and PAGA claims can still be challenged on their own terms. Our Class Action Defense team builds this kind of certification challenge when arbitration isn't available as a forum.
Conclusion
AB 2155 changes the arbitration analysis for California employers beginning January 1, 2027. When the FAA does not apply because an employment agreement falls within an FAA exclusion, the California Arbitration Act will no longer provide the separate enforcement path it previously could.
For employers with drivers, warehouse workers, delivery employees, logistics personnel, or other transportation-adjacent roles, the immediate issue is classification. The question is not simply what the employee's job title says or whether the company operates in transportation. Courts look at the actual work performed by the relevant class and whether that work plays a direct and necessary role in interstate commerce.
With AB 2155 approaching, employers should identify potentially affected worker classifications, review existing arbitration agreements, and determine whether their current enforcement strategy assumes a CAA fallback that will no longer be available. The September 2026 decision in Joyner v. Frontier Airlines also reinforces the importance of defining the relevant class of workers correctly before drawing conclusions about FAA coverage.
If you are evaluating an arbitration agreement involving transportation or logistics workers, DefendMyBiz offers a paid 1-hour consultation with an employer defense attorney.
Frequently Asked Questions
What is the FAA Section 1 exemption?
How does California's AB 2155 affect the transportation worker exemption?
Which workers count as "transportation workers" in California?
Does AB 2155 apply retroactively?
Can I still use arbitration if some of my workers are exempt?
Disclaimer: The above content is for informational purposes only. This is not legal or tax advice. Laws, IRS guidance, and withholding requirements can change, and outcomes depend on specific facts. You are advised to contact a qualified attorney for any legal advice.
