On May 28, 2026, the United States Supreme Court issued a unanimous decision in Flowers Foods, Inc. v. Brock, No. 24-935, holding that a local delivery driver who picks up and delivers goods entirely within one state can qualify for the Federal Arbitration Act’s transportation-worker exemption if his intrastate route forms part of a continuous interstate journey—even if he never crosses a state line or interacts with vehicles that do.

Background

Flowers Foods, one of the Nation’s largest packaged baked goods producers, distributes its products through franchisee-distributors who purchase rights to serve specific territories. Angelo Brock is one such distributor serving Denver. He picks up Flowers products from a Colorado warehouse and delivers them to local retail stores without ever leaving the state.

In 2022, Brock sued Flowers alleging underpayment under federal and state wage laws. Flowers moved to compel arbitration under an arbitration clause in Brock’s distribution agreement. The district court denied the motion, and the Tenth Circuit affirmed, holding that Brock belonged to a class of workers “engaged in interstate commerce” under Section 1 of the FAA—and thus fell within the statute’s transportation-worker exemption—because his intrastate route was a constituent part of an interstate journey.

The Court’s Analysis

Section 1 of the FAA exempts from the Act’s arbitration-enforcement provisions the “contracts of employment . . . of any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Flowers Foods is the fourth consecutive case in which the Supreme Court has rejected efforts to narrow that exemption. See New Prime Inc. v. Oliveira, 586 U.S. 105 (2019); Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022); Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. 246 (2024).

Justice Gorsuch, writing for a unanimous Court, rejected Flowers’s proposed bright-line rule that a worker must either cross state lines or interact with vehicles that do. The Court anchored its analysis in the text: when the FAA was enacted in 1925, “interstate commerce” encompassed the intrastate legs of a continuous interstate journey, and nothing in the word “engaged” required a worker to personally cross a state line. The Court drew support from The Daniel Ball, 10 Wall. 557 (1871), which held that a steamer operating entirely within Michigan was “engaged in commerce between the States” because it carried goods destined for or arriving from other states—establishing that using multiple independent carriers, some acting wholly within a single state, does not alter the interstate character of a continuous shipment.

The Court declined to address two alternative arguments Flowers raised but did not fully brief: whether the exemption applies when a worker contracts through an independently-operated business entity (a question on which circuits are split) and whether a distributor who purchases and takes title to goods before reselling them stands outside Section 1’s reach. Both issues remain open for future cases.

Practical Takeaways

  • Intrastate routes are not a safe harbor. Texas employers that use arbitration agreements with local delivery drivers or distributors cannot assume those agreements are enforceable under the FAA simply because the workers never leave the state. If the goods they deliver originated out of state as part of a continuous shipment, the Section 1 exemption may apply.
  • State arbitration law may offer an alternative path. Section 1 limits only the FAA. Texas’s General Arbitration Act does not contain an equivalent transportation-worker exemption, and arbitration agreements that expressly invoke state law arbitration provisions in the event a court determines the FAA does not apply may provide an avenue to enforce individual, non-class arbitration of disputes with transportation workers.

A copy of the Court’s opinion is here.

On June 12, 2026, the Fifth Circuit issued its decision in Guilbeau v. Schlumberger Technology Corporation, No. 25-50594, holding that a hybrid compensation scheme combining a fixed biweekly salary with variable day rates qualified as “salary basis” pay under the FLSA, exempting the named plaintiff from overtime as a highly compensated employee (HCE).

Background

Schlumberger paid its Directional Drillers and Measurements While Drilling employees under a hybrid system: a fixed biweekly salary that did not vary with hours or days worked, plus variable day-rate pay for each day worked on a rig. The variable component often comprised the majority of an employee’s total compensation. The plaintiffs brought a collective action seeking overtime pay, arguing the day-rate component of their pay disqualified them from salaried exempt status. The district court denied Schlumberger’s motion for summary judgment, and the Fifth Circuit accepted interlocutory appeal.

The Court’s Analysis

The FLSA’s overtime exemption for HCEs requires, among other things, that the employee be paid on a “salary basis.” Two regulatory pathways exist. Under 29 C.F.R. § 541.602(a), an employee is salaried if he receives a predetermined amount each pay period on a weekly or longer basis that does not vary with work quantity or quality — with additional variable compensation permitted on top. Under 29 C.F.R. § 541.604(b), employees paid on an hourly or daily basis can still qualify as salaried, but only if a “reasonable relationship” exists between guaranteed and actual pay — a standard the Fifth Circuit has interpreted to require that actual earnings not exceed 1.5 times the guaranteed amount.

The critical question was which pathway applied. If Section 604(b) governed, the plaintiffs would win — their ratio of actual to guaranteed pay far exceeded the 1.5-to-1 ceiling. The court held, however, that Section 602(a) controlled because the guaranteed salary was a predetermined sum calculated on a biweekly basis and not derived from hours or days worked. The variable day rates were simply permissible “additional compensation” that did not disturb the salary basis classification. The court reaffirmed its earlier holding in Venable v. Smith International, 117 F.4th 295 (5th Cir. 2024), that the nature of the guaranteed pay — not the variable component — determines which regulatory pathway governs.

The court reversed and ordered summary judgment for Schlumberger on the named plaintiff’s claims, but remanded for further proceedings on the remaining collective members, whose individual job duties, compensation levels, and salary thresholds had not been fully developed in the record.

Practical Takeaways

For employers using hybrid pay structures, Guilbeau reinforces several important points:

  • A fixed salary meeting the weekly minimum establishes salary basis under Section 602(a) even where variable pay comprises the majority of actual compensation — provided the salary is truly predetermined and not derived from hours or days worked.
  • The cautionary counterpoint remains that where a guaranteed minimum that was simply a function of an hourly rate times hours was treated as hourly pay — not a salary — and subjected to the more demanding Section 604(b) reasonable relationship test.
  • Collective actions involving hybrid pay carry individual-inquiry risks. Even where the named plaintiff is exempt, other collective members may present individualized questions about duties and compensation that require separate analysis.

A copy of the Fifth Circuit’s opinion is available here.

Since the COVID-19 pandemic and the necessity that many jobs be performed, at least temporarily, from home, employers and employees have litigated numerous disputes over when work-from-home eliminates an essential function of a position (i.e., onsite attendance) or is a reasonable accommodation. On May 8, 2026, the United States Court of Appeals for the Fifth Circuit issued a decision in Hayes v. GStek, Incorporated, No. 25-30392, affirming the dismissal of an employee’s Americans with Disabilities Act (ADA) claims where the employee’s requested accommodation — full-time telework — would have eliminated an essential function of his job. The decision provides useful guidance for employers navigating ADA accommodation requests in a post-pandemic workplace.

Background

Albert Hayes worked as a contract IT systems administrator at Fort Polk’s Army Network Enterprise Center through GStek, Inc., an Army contractor. During the COVID-19 pandemic, Hayes was permitted to telework on a temporary basis. When GStek and the Army transitioned employees back to in-person work in February 2022, Hayes was overstimulated by his return to the office and was subsequently diagnosed with Autism, Major Depressive Disorder, and Social Anxiety Disorder. In August 2022, Hayes was admitted to inpatient psychiatric care due to suicidal ideations.

In October 2022, Hayes submitted a physician’s note and formally requested full-time telework as a reasonable accommodation. While GStek’s project manager was initially receptive, the Army determined that allowing full-time telework for its contractors’ employees would not be in the best interest of the organization. Because Army officials retained express authority to control conditions of GStek employees’ work at the base — including telework eligibility — GStek could not unilaterally grant the request. As a partial accommodation, GStek permitted Hayes to work from home two to three days per week beginning in December 2022.

In January 2023, Hayes had a mental breakdown and thereafter communicated to GStek that he needed to work from home full-time. After GStek received no response to Hayes’s inquiry about whether he needed to report to work, GStek terminated his employment on January 25, 2023, citing absenteeism and other concerns. Hayes filed a charge of discrimination with the EEOC, received a right-to-sue notice, and brought suit against GStek asserting three ADA claims: failure to accommodate, disability discrimination, and retaliation. The district court granted GStek’s motion for judgment on the pleadings and dismissed all three claims with prejudice. Hayes timely appealed.

The Fifth Circuit’s Analysis

Failure to Accommodate

To prevail on a failure-to-accommodate claim under the ADA, a plaintiff must show: (1) he is a qualified individual with a disability; (2) the disability and its limitations were known to the employer; and (3) the employer failed to make reasonable accommodations for those known limitations. The threshold question in Hayes was whether Hayes qualified as a “qualified individual” — meaning he could perform the essential functions of his job with or without a reasonable accommodation.

The court held that in-person attendance was an essential function of Hayes’s position. Several factors supported this conclusion. The Army — which retained contractual authority over conditions of employment at Fort Polk — determined that full-time telework was not in the organization’s interest. Current incumbents performing similar contract services for the Army did not receive telework accommodations. Hayes’s supervisor further noted that granting full-time telework to Hayes could open the door to similar requests from other employees, potentially jeopardizing GStek’s contractual relationship with the Army.

The court also emphasized that an employer’s ability to supervise employees is a relevant factor in assessing whether a telework accommodation is reasonable, and that direct supervision is inherently more difficult when employees never report to the office. Hayes himself acknowledged multiple instances where he and his supervisor were unable to communicate effectively.

Critically, the court reaffirmed the established principle that temporary pandemic-era telework arrangements do not permanently alter the essential functions of a job. Citing its earlier decision in Ray v. Columbia Brazoria Indep. Sch. Dist. (5th Cir. Apr. 28, 2025), the court stated that an employer’s decision to permit telework during COVID-19 for health and safety reasons does not mean that telework becomes a feasible or required accommodation going forward.

Because full-time telework would have required eliminating an essential in-person function of Hayes’s job, the court found it was not a reasonable accommodation. The court further noted that GStek satisfied its statutory obligation by providing the partial accommodation of two to three days of remote work per week — and that the ADA does not require an employer to provide an employee’s preferred accommodation, only a reasonable one.

Disability Discrimination

Hayes’s disability discrimination claim fared no better. Analyzed under the familiar McDonnell Douglas burden-shifting framework, Hayes was required to establish, among other things, that he was a qualified individual for his position. Because the court had already determined that Hayes was not qualified — he could not perform the essential in-person functions of his job even with a reasonable accommodation — his discrimination claim failed at the prima facie stage.

Retaliation

The court also affirmed dismissal of Hayes’s retaliation claim. To establish a prima facie case of ADA retaliation, a plaintiff must show: (1) he engaged in ADA-protected activity; (2) he suffered an adverse employment action; and (3) a causal connection exists between the two. Hayes argued that the temporal proximity between his accommodation request and his termination established causation.

The court disagreed for two reasons. First, three months elapsed between Hayes’s initial accommodation request and his termination — a gap the court found insufficient to establish the “very close” temporal proximity required to support an inference of causation. Second, and more fundamentally, because Hayes was unable to perform the essential functions of his job, his accommodation request was unavailing as a matter of law, and a failed request for an accommodation cannot serve as the basis for a viable retaliation claim.

Practical Takeaways

Hayes v. GStek offers several practical reminders for employers:

  • Pandemic telework does not create a permanent accommodation baseline. Employers who permitted employees to work remotely during COVID-19 did not thereby transform telework into an essential job accommodation. The temporary nature of pandemic-era arrangements should be documented clearly.
  • In-person attendance remains an essential function of most jobs. Courts continue to recognize regular worksite attendance as an essential function, and full-time telework is rarely a reasonable accommodation, particularly where the employer’s operational needs or contractual obligations require in-person presence.
  • An employer satisfies the ADA by providing a reasonable accommodation, not the employee’s preferred one. Where an employer makes a good-faith effort to provide a partial accommodation that does not require eliminating essential job functions, it has likely met its statutory obligation.
  • Contractors operating under client-controlled work conditions should document those constraints. GStek’s contractual relationship with the Army — including the Army’s express authority to set telework policies for contract employees — was significant to the court’s analysis. Employers in similar third-party-controlled environments should ensure those constraints are clearly documented.

A copy of the opinion in Hayes v. GStek, Inc. is available here.

Earlier this year, the United States Court of Appeals for the Fifth Circuit issued a significant decision in Trinseo Europe GmbH v. Kellogg Brown & Root, L.L.C., No. 24-20460, providing important guidance on damages calculation in trade secret misappropriation cases. The case demonstrates the importance of apportioning damages among the various trade secrets that are misappropriate or risk a loss of the damages award if less than all of the information misappropriated qualifies as trade secrets.

Background

The dispute involved polycarbonate manufacturing technology developed by Dow Chemical and later acquired by Trinseo. Trinseo alleged that former Dow employees formed a consulting group and, along with Kellogg Brown & Root (KBR), misappropriated ten trade secrets in violation of the Defend Trade Secrets Act (DTSA). At trial, the jury found liability on four of the ten alleged trade secrets and awarded Trinseo over $75 million in damages.

The Fatal Flaw: Failure to Apportion

Despite the jury’s favorable findings, Trinseo’s damages award was vacated because the damages expert failed to apportion damages between the ten “trade secrets” that were misappropriated.  Trinseo’s damages expert provided estimates that assumed misappropriation of all ten alleged trade secrets. The expert failed to individually value each trade secret or offer any methodology for the jury to calculate damages based on fewer than ten secrets.

The Fifth Circuit’s Analysis

The Fifth Circuit affirmed the district court’s decision, holding that trade secret damages must be apportioned when the plaintiff alleges multiple trade secrets but only proves misappropriation of some of them. The court applied the reasoning from patent infringement cases to conclude that when the accused technology does not comprise the entire accused product, damages must be apportioned between patented and unpatented features. The Fifth Circuit held that the same principle applies in trade secret cases. Because Trinseo presented damage estimates premised on all ten trade secrets, but the jury found only four were misappropriated, there was no reasonable basis for the jury to calculate damages.  Thus, the damage award was vacated because the plaintiffs bundled the trade secrets together without providing per-secret valuations.

TUTSA Preemption: No End-Run Around Trade Secret Standards

Also notable was the holding that the Plaintiff’s alternative common-law claims for “misappropriation of confidential information” were preempted by the Texas Uniform Trade Secrets Act (TUTSA).  Trinseo had asserted these claims in the alternative, hoping that if certain information failed to qualify as a trade secret, it might still recover under a common law claim of confidential information misappropriation.

The court held that the Texas Uniform Trade Secrets Act (TUTSA) preempts such claims when they are premised on the same information and facts as the trade secret claims. Looking to the substance of Trinseo’s pleadings—which alleged the confidential information was used in business, provided competitive advantage, and was kept substantially secret—the court concluded that the information fell within TUTSA’s definition of a trade secret and was therefore preempted by TUTSA and the district court’s dismissal of the common law claim on summary judgment was proper.

You can download the entire opinion in Trinseo Europe GmbH v. Kellogg Brown & Root, L.L.C. here.

Beginning September 1, 2025, noncompetition agreements with dentists, professional and vocational licensed nurses, and licensed physician assistant (collectively “health care practitioners”) must include:

  • An option to buy-out of the noncompete in an amount not greater than the practitioner’s total annual salary and wages at the time of termination;
  • Temporal limitations not greater than one-year following the termination of employment;
  • Geographic limitations not greater than a five-mile radius from the primary practice locations of the health care practitioner;
  • Be clearly and conspicuously stated in writing.

Agreements that do not include these provisions are likely to be held unenforceable.

Doctor with a stethoscope
Online Marketing, Unsplash

Effective September 1, 2025, the Texas Legislature imposed additional restrictions for enforceable noncompetition agreements with physicians entered on or after that date.  For agreements entered after September 1, 2025, in addition to the other longstanding restrictions, the agreements must not:

  • Include a buy-out that is greater than the total annual salary and wages of the physician at the time of termination.
  • Last longer than the one-year anniversary of the date the contract or employment is terminated.
  • Be greater geographically than a five-mile radius from the location at which the physician primarily practiced before termination.
  • Be clearly and conspicuously stated in writing.

Importantly, the new law also provides that a noncompete relating to the practice of law with a physician licensed by the Texas Medical Board is void and unenforceable against a physician who is involuntarily terminated without “good cause”.  “Good cause” means a reasonable basis for discharge that is directly related to the physician’s conduct on the job or otherwise, job performance, and contract or employment record.

On July 14, 2025, the U.S. Court of Appeals for the Fifth Circuit issued a significant decision addressing the application of the Fair Labor Standards Act (FLSA) overtime exemption for highly compensated employees (HCEs) in the oilfield services sector. In Gilchrist v. Schlumberger Technology Company, the court reversed a district court ruling and held that two former employees of an oilfield services company, who worked as Measurements While Drilling Field Specialists (MWDs), were exempt from FLSA overtime requirements due to their level of compensation and their administrative and advisory duties.

Background

The plaintiffs, who served as MWDs, were responsible for providing real-time downhole data—such as drilling trajectory, pressure, and temperature—to clients engaged in oil and gas exploration. Their work was critical to ensuring safe and efficient drilling operations, as errors could result in significant operational and safety risks. The MWDs’ primary responsibilities included rigging up equipment, monitoring and quality checking drilling data, and communicating findings to the directional driller and, ultimately, the client.

Despite earning annual compensation well above the regulatory threshold for HCEs (over $200,000), the plaintiffs were not paid overtime. They brought suit, alleging they were not exempt from FLSA overtime provisions. The district court found in their favor, concluding that their duties did not qualify as exempt administrative or executive work.

Fifth Circuit’s Analysis

On appeal, the Fifth Circuit focused on whether the plaintiffs met the requirements for the HCE exemption under 29 U.S.C. § 213(a)(1) and 29 C.F.R. § 541.601(a). The parties agreed that the compensation and non-manual work requirements were satisfied; the dispute centered on whether the plaintiffs “customarily and regularly performed” at least one exempt administrative or executive duty.

The court held that the MWDs performed two qualifying administrative duties:

  1. Quality Control: The court found that the MWDs’ role in quality checking drilling data before it was provided to clients constituted administrative quality control work, as contemplated by the regulations. The MWDs were responsible for ensuring the accuracy and completeness of data logs, removing erroneous data, and preparing final reports for client review. This work was performed “customarily and regularly,” meeting the regulatory standard for frequency.
  2. Advisory and Consulting Functions: The court also determined that the MWDs acted as advisers to the company’s clients by providing essential real-time information and guidance during drilling operations. Drawing on recent Fifth Circuit precedent, the court concluded that such advisory work directly related to the management or general business operations of the employer’s customers, satisfying the administrative exemption criteria.

The Fifth Circuit rejected the district court’s reliance on prior, more restrictive interpretations of the administrative exemption and clarified that, under the HCE exemption, a “fair reading” of the regulations is required. The court also noted that the HCE exemption imposes a more flexible duties standard than the standalone administrative exemption, requiring only that the employee customarily and regularly perform one qualifying duty.

Because the plaintiffs’ administrative duties were sufficient to satisfy the HCE exemption, the court did not address arguments regarding executive duties or the exercise of discretion and independent judgment.

Practical Impact

This decision reinforces the applicability of the HCE exemption to oilfield service employees whose primary responsibilities include quality control and advisory functions, even where their direct client interaction may be limited. The ruling clarifies that high compensation, coupled with regular performance of qualifying administrative duties, is sufficient to exempt employees from FLSA overtime requirements under the HCE standard.

A copy of the Fifth Circuit’s opinion is available here.

On June 5, 2025, the U.S. Supreme Court issued a unanimous decision clarifying the evidentiary standard for Title VII disparate treatment claims.  The Court held that plaintiffs who are members of a majority group—such as heterosexuals, men, or whites—are not required to meet a heightened evidentiary burden to establish a prima facie case of discrimination.  This decision resolves a circuit split, reinforcing that Title VII’s protections apply equally to all individuals, regardless of group membership.

In that case, Marlean Ames, who identifies as a heterosexual woman, had been employed by the Ohio Department of Youth Services since 2004, holding various positions over the years. In 2019, she applied for a newly established management role within the agency’s Office of Quality and Improvement. Although she was interviewed for this position, the agency ultimately selected another candidate, a lesbian woman, for the job.  Shortly after her interview, Ames was removed from her position as program administrator by her supervisors. She accepted a demotion, returning to her previous secretarial role, which came with a significant reduction in pay. The agency subsequently filled the now-vacant program administrator position with a gay man.

Ames believed that her sexual orientation was the reason she was denied the promotion and later demoted. As a result, she filed a lawsuit against the Ohio Department of Youth Services, alleging that these employment decisions constituted discrimination under Title VII. The lower courts initially ruled against her, applying a heightened evidentiary standard because she was a member of a majority group.  Under that heightened evidentiary standard, the court required a member of a majority group to show “background circumstances to support the suspicion that the defendant is the unusual employer who discriminates against the majority.”

In an interesting concurring opinion, Justice Thomas signaled that, in an appropriate case, he would be willing to reconsider whether the long-standing McDonnell Douglas burden-shifting test remains a workable and useful evidentiary tool for trial courts evaluating disparate treatment employment discrimination claims.

This decision should have little impact on Texas employers because the Fifth Circuit Court of Appeals was not one of the circuits requiring members of a majority group to make a heightened showing that the defendant is the unusual employer who discriminates against the majority.

A copy of Ames v. Ohio Depart. of Youth Services is available here.

The case arose from a dispute involving an SMU professor who alleged she was denied tenure due to discrimination and retaliation. In addition to statutory discrimination and retaliation claims against the University, she brought common law claims for defamation and fraud against individual co-workers, based on statements and actions taken during the tenure review process. The district court dismissed the defamation and fraud claims against the employees, reasoning that the Texas Commission on Human Rights Act (TCHRA)
preempted such claims when they were based on the same conduct as the statutory discrimination claims.

The Fifth Circuit Court of Appeals certified the question to the Texas Supreme Court. In holding that employees were not shielded from common law tort claims based on the
TCHRA preemption provisions, the Court noted the following as significant:

  • The TCHRA is expressly limited to employer liability and does not create personal
    liability for individual employees.
  • The Act’s comprehensive remedial scheme precludes duplicative or alternative
    claims against employers, it does not extend that exclusivity to individual employees.
  • Longstanding Texas common law provides remedies for torts such as defamation
    and fraud, and nothing in the Act’s text or structure indicates a legislative intent to abrogate
    those remedies as to employees.

The practical effect of the decision is that employees accused of workplace misconduct—such as making allegedly defamatory statements or committing fraud—may face personal liability under common law, even if the same conduct is also the basis for a statutory discrimination or retaliation claim against the employer. In practice, this does not appear to come up often, the Court’s decision could encourage a greater number of these filings in the future.

A copy of the full opinion is available here.

Today, the U.S. Supreme Court unanimously held that “the preponderance-of-the-evidence standard applies when an employer seeks to prove that an employee is exempt from the minimum-wage and overtime-pay provisions of the Fair Labor Standards Act (FLSA).” The Court reversed the Fourth Circuit, which had affirmed the District Court’s use of the “clear-and-convincing-evidence standard” in favor of the employees, who sued their employer for failing to pay them overtime.  The Court explained that “the preponderance standard is the default in civil litigation,” and that the FLSA does not specify a different standard, nor does the Constitution or any other exceptional circumstance require one.  The Court rejected the employees’ policy arguments for a heightened standard and remanded the case for the lower courts to apply the correct standard to the facts.

This case will have little impact on FLSA cases litigated in the Fifth Circuit as the courts have generally applied a preponderance of the evidence standard in exemption cases.

A link to the entire opinion is here.