It’s now easier for alleged joint employers to compel arbitration

Nearly four years ago, the U.S. Supreme Court held employers can enforce arbitration agreements that waive an employee’s right to join a class action lawsuit. Since then, many companies have avoided what would be costly class action lawsuits, particularly in the wage and hour context, by requiring individual arbitration with employees. Despite this, there was often a gap for joint employers, specifically those companies that use staffing agencies to perform some type of labor. Now, a federal appeals court has made the loophole smaller.

Background

Oil and gas companies may use vendors or staffing companies to provide labor on an oil rig. Or a company may contract with a janitorial services provider to clean its offices. In those instances, the staffing companies would have the direct relationship with the workers. As staffing companies began to use arbitration agreements with class action waivers more often, it became increasingly difficult for employees to file to class action lawsuits.

To get around this, more employees were suing the companies that used the staffing agencies and didn’t have arbitration agreements with them, arguing they were either a direct employer or joint employer. Applying Oklahoma law, a federal court of appeals recently restricted, if not completely foreclosed, the increasingly common litigation tactic.

Facts