A federal appeals court has refused to enforce an arbitration provision between a worker the consulting firm that hired him.  NZone Guidiance, L.L.C., an oil and gas services company, hired the lead plaintiff and other workers through RigUp Inc., a workforce bidding platform. When those workers brought suit against NZone, NZone moved to compel arbitration based on an agreement between the workers and RigUp. The district court denied the motion, and NZone appealed.  The United States Court of Appeals for the Fifth Circuit affirmed the district court’s denial of the motion, refusing to enforce the arbitration provision.  The Court found that because the plaintiffs’ overtime claims were based on a right conferred by federal law, the plaintiffs did not seek a benefit from their agreements with RigUp, and NZone could not compel arbitration under direct benefits estoppel. The Court also found that the arbitration provision at issue stated that it would “resolv[e] disputes between you and RigUp,” and thus did not confer on NZone the right to enforce the arbitration agreement.  As such, NZone could not enforce the arbitration provision between the workers and RigUp.  Twenty five workers ended up joining the lawsuit, and after this appeal, NZone settled the lawsuit for a confidential amount.  

The oil and gas industry has faced a wave of overtime lawsuits over the past ten years. Oil  producers and service companies have resorted to using consulting firms or staffing companies to fill their labor force in an effort to make an end run around these lawsuits.  They contract with these consulting firms, who in turn hire “independent contractors” who work for the production or service companies and are paid a day rate or straight time with no overtime pay.  However, this practice may still violate the FLSA. At the end of the day, generally speaking, regardless of whether a consulting firm is involved or not, if a worker is told where to work, when to work, and how to work, that worker is an employee, not an independent contractor, and is due overtime pay under the FLSA unless certain narrow exemptions apply.  If you have worked in the oil industry through a consulting firm or staffing company, speak with an experienced overtime attorney as soon as possible to learn of your legal rights.  

Josh Borsellino has represented hundreds of employees that were paid day rates on claims for unpaid overtime.  He works hard to get workers the overtime pay they deserve. Call Josh Borsellino at 817.908.9861 or email him here for a free and confidential, no-obligation consultation.