The Federal Arbitration Act ordinarily obligates federal and state courts to enforce arbitration agreements, including in employment contracts. However, a nearly-century-old carveout in Section 1 exempts from the FAA’s sweep contracts of employment for seamen, railroad workers or other individuals “engaged in foreign or interstate commerce.” The “gig” economy has spawned increased litigation over the carveout’s scope—specifically, whether it applies to certain categories of workers, ranging from Amazon drivers to Grubhub delivery workers. Disagreements are emerging among the federal courts, the law is uncertain in the Eleventh Circuit, and Supreme Court review may soon be called for.

Current discussions of the FAA’s carveout begin with the Supreme Court’s decisions in Circuit City v. Adams and New Prime Inc. Oliveria. Adams held that the Section 1 carveout only applied to certain “transportation workers.” It rejected a broader formulation that would have exempted any employment contract that affected interstate commerce (essentially another effort to relitigate the enforceability of arbitration clauses in employment agreements following the demise of the non-arbitrability doctrine). New Prime added further gloss to Section 1 by holding that the carveout applied equally, not only to employees, but also to “independent contractors.”

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