The US Supreme Court’s recent decision not to opine on whether local delivery drivers are transportation workers exempt from mandatory arbitration agreements in employment disputes is forcing lower federal courts to grapple with the scope of the carveout.

The Federal Arbitration Act, which generally favors arbitration over litigation, contains an exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

The justices in June decided Southwest Airlines Co. v. Saxon, which held that the exemption covers airplane cargo loaders, allowing them to pursue wage-and-hour lawsuits in court. But Saxon explicitly side-stepped the driver issue, and the justices last week again passed on resolving it when they vacated a US Court of Appeals for the Ninth Circuit ruling that Domino’s Pizza LLC ingredient delivery drivers qualify for the carveout.

Instead, the justices asked the appeals court to take a second look at the case in light of Saxon, to the disappointment of legal observers. The lack of clarity will only drag employers further into costly litigation and undermine the benefits of arbitration, they said.

Disparate court rulings on whether local delivery drivers qualify for the FAA’s arbitration exemption have big implications for the gig economy in particular.

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