A federal appeals court has handed workers a notable win in the long-running fight over the reach of mandatory arbitration, ruling that Tesla’s California yard hostlers fall outside the Federal Arbitration Act. The decision allows their wage-and-hour claims to continue in state court rather than being diverted into private arbitration.

The key issue was whether these workers fit within the FAA’s transportation-worker exemption.

State lawmakers and regulators are continuing to fill the AI-policy vacuum, and the latest moves in Illinois and California could have immediate consequences for how lawyers, law departments, and neutrals use generative AI in practice.

Illinois recently enacted a broad AI framework, adding to the growing patchwork of state-level rules that can affect businesses well beyond state borders.