In a recent ruling the Ninth Circuit (covering California and Arizona) upheld a motion to compel arbitration by a non-signatory to an arbitration agreement (Franklin v. Community Regional Medical Center, FKA, No. 19-17570 (9th Cir. 2021)). Franklin, a contract nurse employed by a staffing agency and assigned to Community Regional Medical Center (CRMC), filed a class and collective action against CRMC for state and federal wage and hour violations. The employment contract signed by Franklin and the staffing agency included an arbitration agreement. CRMC was not a signatory to any contracts signed by Franklin.
The Court applied California law – not typically not seen as arbitration friendly – to find Franklin’s allegations against her temporary assignment employer were “intimately founded in and intertwined with” the contracts she signed and the employment relationship she maintained with the staffing agency and CRMC. Affirming the lower court’s ruling, the Ninth Circuit found that under California law, Franklin could not avoid the contractual obligation to arbitrate her workplace claims by suing a non-signatory defendant.
For those who utilize staffing agencies, Franklin illustrates the importance of understanding how the staffing agencies agreement with its temporary workers impacts the temporary employer. While Franklin provides a strong base from which to argue coverage as a non-signatory, having specific contractual language that encompasses the temporary employer within the arbitration agreement itself provides a much stronger argument for compelling arbitration should the need arise.