Arbitration Agreement Between Staffing Company And Employee Did Not Encompass Claims Brought Against The Client To Whom The Employee Was Assigned

In Zachariah v. Rep Processing, LLC d/b/a Rimrock Energy Partners, the Colorado U.S. District Court refused to compel arbitration of FLSA claims brought by an employee of a staffing company (Kestrel) against the client to whom he had been assigned.

The client sought to assert rights as a third party beneficiary of an arbitration agreement between the employee and Kestrel, but the court–before reaching the third party beneficiary claim–found that the dispute fell outside the scope of the arbitration agreement, which, as the court explained, provided for arbitration of ““all past, present, and future claims or controversies, including, but not limited to, claims arising out of or related to [plaintiff’s] application for employment, employment, or termination of [plaintiff’s] employment that [Kestrel] may have against [plaintiff] or [plaintiff] may have against: (i) [Kestrel] or its subsidiaries or affiliated entities (“Kestrel Entities”); (ii) Kestrel Entities officers, directors, employees, or agents in their capacity as such or otherwise, (iii) Kestrel Entities’ benefit plans or the plans’ sponsors, fiduciaries, administrators, affiliates, and agents, and/or (iii) all of their successors and assigns.”

According to the court, this language, while broad, did not encompass claims between the employee and Kestrel’s clients.

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