The Third Circuit Court of Appeals recently issued a ruling in Singh v. Uber Technologies Inc. holding that Uber drivers are subject to the Federal Arbitration Act (“FAA”) since they do not belong to a “class of workers engaged in foreign or interstate commerce.”

In that case, the Uber drivers argued that, despite agreements requiring the arbitration of all disputes with Uber, they were exempt from arbitration under § 1 of the FAA, which exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The District Court disagreed holding that the Uber drivers did not fall within this exemption.

On appeal, the drivers again argued that they were exempt from the FAA, falling within a “class of workers engaged in interstate commerce” since some drivers perform interstate trips. The Third Circuit, however, noting the District Court’s findings that “[interstate] rides constitute just 2% of all [Uber] rides,” found that this was not “enough to make interstate transportation central to [Uber drivers’] job description.” In reaching this conclusion, the Third Circuit construed the § 1 exemption to the FAA narrowly due to the Act’s “statutory context” and “purpose.”

In reaching its decision, the Third Circuit also recognized two recent decisions from the Ninth and First Circuits involving the applicability of the FAA to rideshare drivers. In Capriole v. Uber Technologies, Inc., the Ninth Circuit found that “interstate movement” was not a “central part of [Uber driver’s] job description.” Likewise, in Cunningham v. Lyft, Inc., the First Circuit found that Lyft (another ride share company) was “primarily in the business of facilitating local, intrastate trips.”

The Bottom Line.  At this point, it appears that the § 1 exemption of the FAA will apply only where the engagement in “foreign or interstate commerce” is significant or central to the driver’s job.

The author thanks summer law clerk, Katherine Farmer.