How Employers Are Able to Compel Arbitration

How Arbitration Law Changes Are Affecting Employers

Being able to compel arbitration and avoid class action law suits has worked to the employer’s advantage. This has been true since the U.S. Supreme Court ruled that employers can enforce arbitration agreements to avoid class action lawsuits. The ruling occurred about four years ago.

How staffing companies used arbitration

Staffing companies often supply companies with labor solutions. This occurs in all types of industries. For example, a staffing company would provide a business company with office workers. Furthermore, staffing companies have been able to use arbitration agreements to avoid class action lawsuits. Even so, the business company might not have an arbitration agreement. As a result, plaintiffs have sued the business company directly, claiming it had a relationship with the staffing company. They would allege that it was a joint employer. This practice opened the door again to class action lawsuits.

Reeves v. Enterprise Products Partners, LP

In this particular case, a staffing company hired three welding inspectors to work for Enterprise Products Partners. Furthermore, the staffing company directly paid the inspectors and had arbitration clauses in their employment agreement. However, the agreement did not name Enterprise as a party to the arbitration agreement.

Therefore, the plaintiffs filed a lawsuit against Enterprise and claimed they were Enterprise employees and demanded overtime pay. The lower court ruled that Enterprise could not enforce the arbitration agreement because they were not included as a party in the agreement. However, the appeals court reversed the ruling and decided in Enterprise’s favor. The court stated that Enterprise was so involved with the staffing agency for employment that arbitration would apply to them as well.

(Update reference: JD Supra)

Do you have concerns about being able to compel arbitration?

If you have questions or concerns, you should consult with an experienced employment law defense attorney. Whenever possible, it is wise to do so before legal issues arise. Call (718) 275-6500 to arrange an appointment with Stephen D. Hans & Associates, P.C.