In an unfavorable ruling for the staffing industry, a New Mexico federal district court ruled that a mandatory arbitration agreement signed by a temporary employee and a staffing agency could not compel the temporary employee to arbitrate legal claims against the staffing agency client.
In November 2020, a temporary employee brought claims of unpaid overtime under the Fair Labor Standards Act against a staffing agency, its subsidiary company, and the staffing agency client. Due to a mandatory arbitration agreement between himself and the staffing agency, the employee voluntarily dismissed his claims against the staffing agency and its subsidiary, leaving the client as the sole defendant. Thereafter, the staffing agency filed a motion to compel arbitration of the employee’s claims against the client.
The court denied the staffing agency’s motion for several reasons. To read the case, see Oldham v. Nova Mud Inc., No. Civ. 2:20-cv-01166 MIS/GBW, 2022 BL 445314 (D.N.M. Dec. 13, 2022).