Silva v. Schmidt Baking Distribution, LLC
162 F.4th 354 (2d Cir. 2025)
United States Court of Appeals, Second Circuit · December 22, 2025
What the court decided
The Federal Arbitration Act does not apply to "contracts of employment" of transportation workers. Bakery delivery drivers whom the company required to form their own corporations and sign "distributor agreements" still had contracts of employment: courts look to "the substance of an agreement, not its formalities," and the drivers were individuals doing the same work they had done before, personally guaranteeing it. The court distinguished contracts with sizable delivery companies that employ many drivers.
Who won
The drivers won this round. The Second Circuit vacated the order sending their wage claims to arbitration.
Why it matters for workers
An employer cannot move a delivery driver out of the transportation-worker exemption just by requiring the driver to incorporate.
Key passage: 162 F.4th at 360–63.
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