A Staffing Company’s Employee Arbitration Agreement Can Also Protect Its Clients 

From JDSupra, Jeffrey Cadle discusses a recent case in which the client of a staffing company was able to compel arbitration because of the language in the arbitration agreement between the staffing company and the worker. Jeffrey writes:

Many companies require their employees to sign agreements to arbitrate any employment disputes, including claims for wages and overtime pay under the Fair Labor Standards Act (“FLSA”) and similar state laws.  These agreements often include a waiver of the employee’s right to participate in class or collective actions against the company.  As recently covered by HR Legalist, these types of agreements were upheld by the U.S. Supreme Court in a 2018 decision, Epic Systems v. Lewis.

In Berryman v. Newalta Environmental Services, Inc.,[1] [pdf] decided in November of 2018, the U.S. District Court for the Western District of Pennsylvania held that an arbitration agreement between a staffing agency and its workers can also cover the agency’s client company — if the agreement contains the right language.

In the arbitration agreement, Berryman agreed to arbitrate all disputes, claims or controversies not only between Berryman and Smith Management, but also “arising out of or relating in any way to the services or work” that Berryman performed “for or on behalf of any client of [Smith Management].”  The Court held that Newalta was a third-party beneficiary to that agreement, because the claims covered under the agreement expressly included those arising out of or relating to the services or work Berryman performed on behalf of Smith Management’s clients, and because the agreement further stated that “[a]rbitration shall apply to any and all Covered Claims, whether asserted by [Berryman] against [Smith Management] and/or … against any Company Client.”  This was the case even though Newalta was not mentioned by name in the agreement.  The Court granted Newalta’s motion to compel arbitration and stayed the litigation pending the outcome of the arbitration proceeding.

[1] No. 2:18-cv-793 (W.D. Pa. Nov. 1, 2018).

Read the full story at A Staffing Company’s Employee Arbitration Agreement Can Also Protect Its Clients | Obermayer Rebmann Maxwell & Hippel LLP – JDSupra

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