Tag: Former Employers

California Appellate Court Rules that Applicant’s Arbitration Pact Did Not Apply to Former Employers A California appellate court has found that a business relationship between an applicant's potential employer and a former employer will not extend an arbitration agreement signed between the former parties to disputes between the applicant and their former employers. Notably, despite having employment agreements with both of the former employers, the applicant had never signed an arbitration agreement with either. The applicant later joined a class action lawsuit begun by other employees for wage and hour violations against these employers. Both former employers attempted to compel arbitration, which the trial court rejected. The employers appealed this decision arguing that the court was mistaken in holding that the agreement did not apply to the plaintiff's individual claims. On appeal, the court considered whether or not the employers' business relationship was sufficient to establish an agreement to arbitrate disputes with the plaintiff. When the plaintiff had worked for the two prior employers, she had provided contracted services for one of these employers to work as a packer for a produce packing and shipping company. After the plaintiff's employment with these two employers ended, she applied to work for the third employer who provided payroll services for the other two employers. The plaintiff wasn't hired but did sign an arbitration agreement that defined the "company" to which the agreement applied to include "all related entities, including entities where employees are sent to work." The court noted that contractual principles apply despite a general policy that favors arbitration. Thus, a party cannot be forced into arbitration they have not previously agreed upon. The court held that the plaintiff's arbitration agreement in 2019 did not apply to their previous employment in which they had different employers. The plaintiff's agreement stated at the top in the first sentence that it was part of an onboarding package. According to the court, since the contract contained the word onboarding, it was meant to apply to new employees. The court also stated that the fact the plaintiff's prospective employer had a business relationship with her former employers did not mean that the arbitration agreement could be applied to disputes between the plaintiff and their former employers. The court also held that the plaintiff's two former employers were not third-party beneficiaries of the agreement. The court found no evidence that supported the idea the parties intended the former employers to benefit from the arbitration agreement. Additionally, the court rejected the argument by the former employers that the arbitration agreement could be enforced since the companies were alter egos or agents of each other as well because there wasn't any evidence to support this claim. Interested in learning more about Pre-employ's background checks? Talk to Sales today.

Tag: Former Employers

California Appellate Court Rules that Applicant’s Arbitration Pact Did Not Apply to Former Employers

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