Reinsurance Focus

An administrative law judge for the National Labor Relations Board (“Board”) found in favor of Talina Torres (“Torres”) against Employers Resource (“Employers”) after determining that an arbitration clause within an employment contract was unenforceable. From September 2009 until June 2011, Torres was employed by Beth’s Kitchen, Inc., which was staffed by Employers. Torres filed a wage and hour putative class action lawsuit in California state court after being laid-off. Employers was named as a co-defendant. Employers then successfully moved to compel individual arbitration arguing that, under Stolt-Nielsen, class arbitration may not be inferred when a contract is silent on the issue. Following this ruling, Torres filed a complaint with the Board contending that Employers restricted her rights to engage in “protected concerted activities” as an employee under the National Labor Relations Act, citing recent Board decisions Murphy Oil and D.R. Horton.

In response to the Board complaint, Employers made various arguments, including that the Board lacked standing to hear the case as Torres was not an employee of Employers. Employers further contended that, contrary to the facts in Murphy Oil and D.R. Horton, the employment agreement in this case was not mandatory as a condition of employment with Beth’s Kitchen. The Board, however, found that while Torres did not interact with Employers, Employers did prepare the employment agreement for Beth’s Kitchen, Employers made itself a party to the agreement, and Employers then relied on the agreement in the litigation. Therefore, Employers was sufficiently implicated as violating Torres’s rights under the NLRA. The Board also noted that based on various representations made by Employers and Beth’s Kitchen, Torres was led to believe that the employment agreement was mandatory as a condition of employment. The Board ordered that Employers rescind or revise the mandatory arbitration provision and also that they not oppose Torres’ class action wage and hour suit on the basis of the employment agreement. Employers Resource and Talina Torres, Case 31-CA-097189 (N.L.R.B. May 18, 2015).

This post written by Matthew Burrows, a law clerk at Carlton Fields Jorden Burt in Washington, DC.

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