The Seventh Circuit recently ruled that local Grubhub Inc. drivers must settle their wage-related claims through arbitration, instead of litigation before the courts, if they do not cross state borders while conducting their business. This means that these drivers are not engaged in 'interstate commerce,' a fact that would have otherwise allowed them to bypass the arbitration agreements they signed with their employers, as per the Federal Arbitration Act.
The app-based companies like Grubhub, Lyft Inc., Uber Technologies Inc., etc., have widely used arbitration contracts to keep their drivers' wage-related claims out of courts for years, by classifying them as 'independent contractors' rather than as 'employees'. The Seventh Circuit’s ruling follows a July decision of the First Circuit which held that Amazon Flex drivers were engaged in 'interstate commerce', even though they operated only within one state’s boundaries, allowing these drivers to litigate their wage claims before the courts.
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