By Daniel Wiessner

(Reuters) – Southwest Airlines(NYSE:) Co. cannot forcibly a baggage handler’s class action lawsuit about overtime pay to be turned over into private arbitration. This decision by the U.S. Supreme Court (NASDAQ:) has costly implications for transportation companies such as Uber Technologies (NYSE 🙂 Inc.

In a Justice Clarence Thomas decision, the justices decided 8-0 that baggage handlers were engaged in interstate commerce as they regularly load cargo onto planes crossing state borders. This exempts them from federal laws that require that agreements be enforced to bring legal claims through arbitration and not court.

Latrice Saxon from Chicago, an employee working as a ramp supervisor, was accused by Southwest of not paying overtime workers in a Illinois lawsuit in 2019. Ramp supervisors supervise and train baggage handlers, and occasionally load cargo onto airplanes.

The case was referred to arbitration by a Chicago federal judge. He ruled that workers cannot be engaged in interstate commerce simply because they transport cargo. Chicago’s 7th U.S. Circuit Court of Appeals reversed the ruling and Southwest appealed to the Supreme Court.

Southwest claimed Monday’s ruling will have minimal effect on them because many of their baggage workers are unionized. This allows for wage claims to be brought separately.

Over half of U.S. private sector employees signed arbitration agreements. These agreements typically allow them to resolve wage disputes on their own behalf rather than for large groups of workers. Arbitration is faster and more effective than suing in court, according to business groups.

Others who work as transportation workers and do not usually cross state borders may take Monday’s ruling to show that they are also exempted from wage arbitration lawsuits. Companies such as Uber and Amazon would be subject to more group actions, rather than single worker arbitration claims.

Uber drivers and Amazon delivery “last mile” drivers have made it clear that their interstate commerce activities make them exempt from the Federal Arbitration Act.

Amazon, Uber, Lyft Inc (NASDAQ:), and other major trade organizations had submitted briefs asking the Supreme Court not to rule against Southwest. According to them, the Federal Arbitration Act exemption only covers certain workers like railroad employees or seamen who transport goods from one state to another.

Supreme Court ruled that Southwest baggage handlers are crucial in the movement of cargo across border borders. However, the court ruled that all employees of airlines are exempt from the Federal Arbitration Act.

Jennifer Bennett, Saxon’s lawyer said that the court’s reasoning could apply to many groups of workers, such as last-mile delivery drivers.

Bennett stated, “The decision sets the direction courts should take in these cases.”