May 21, 2019

May 21, 2019

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May 20, 2019

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California Enforces Arbitration Agreement with Staffing Agency in Favor of Worksite Employer

An employer successfully compelled arbitration under an arbitration agreement that the plaintiff-workers had with their staffing agency, even though the staffing agency was not a defendant in the lawsuit.

The plaintiffs sued the primary employer, but not the staffing agency with whom they had entered into an arbitration agreement. On January 3, 2019, a California appeals court ruled in an unpublished opinion that a “worksite employer” could compel enforcement of an arbitration agreement between plaintiffs and a staffing agency, even though the staffing agency was not named as a defendant in the lawsuit and the worksite employer was not a signatory to the arbitration agreement.

In this case, two workers had sued the worksite employer claiming they were not properly paid wages, given meal and rest breaks, provided wage statements, or timely paid after termination. The court ruled that because the worksite employer and the staffing agency were co-employers of the plaintiffs, and both were responsible for complying with state labor laws, the worksite employer could enforce the arbitration agreement. The court said it was “inconsequential” that the plaintiffs had not named the staffing agency. Plaintiffs could not avoid arbitration by only suing the worksite employer, which was not a party to the agreement.

Even though this case is unpublished and is not available for citation purposes, it reinforces the argument that arbitration agreements may be enforced through third-party agreements (e.g., joint employers or agent relationships), even when the party is not a defendant or signatory to the agreement. Employers that are sued and use staffing agencies, will want to consider whether arbitration agreements with the staffing agency exist to compel arbitration.

Jackson Lewis P.C. © 2019

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About this Author

Erin Kendrella Labor Employment Attorney
Associate

Erin W. Kendrella is an Associate in the Orange County, California, office of Jackson Lewis P.C. Her litigation practice focuses on individual and class action labor and employment-related matters in state and federal courts.

Ms. Kendrella advises and represents businesses of all sizes in a broad range of employment law matters, including those involving discrimination and harassment, wage and hour, wrongful termination, and retaliation claims. She also advises managers and supervisors on preventive litigation practices, concentrating on how to comply with...

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