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Since the advent of the gig economy, the courts have struggled to bring workers in such companies into the traditional framework of labor law. A common question is whether the Federal Arbitration Act (FAA) applies to drivers who work for ride-sharing agencies, Uber and Lyft. When the FAA is applicable, pre-trial arbitration agreements are enforced that cover federal and state legal claims. When the FAA does not apply, enforcement is a matter of state law, and California and other states have made it clear that they will not enforce such covenants.
Section 1 of the FAA provides that the FAA does not apply to “employment contracts of seafarers, railroad workers, or any other class of worker engaged in foreign or international trade.” 9 USC §1. The Supreme Court interpreted this clause in two major decisions. First, in Circuit City Stores v. Adams, 532 US 105 (2001), the court ruled that the exemption only applies to transport workers “engaged in foreign or international trade”. Second, and more recently, the Supreme Court in New Prime v Oliveira, 139 S. Ct. 532 (2019) found that “employment contracts” included independent contractual arrangements with interstate truckers.
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