An employee’s settlement agreement with a staffing agency on a wage-and-hour claim does not necessarily preclude the employee from later suing the staffing agency’s client on the exact same claims, a California appeals court affirmed.

Jeffrey Brown and Tyler Runge, of law firm Payne & Fears, discussed the Feb. 6 decision, Grande v. Eisenhower Medical Center, in a JD Supra blog post.

“This case is an important reminder to exercise care in drafting settlement agreements, particularly the scope of the release,” Brown and Runge wrote. “In complex cases involving multiple entities, staffing agencies, joint employers, or potential indemnitees, the release should expressly name each and every released entity.”

FlexCare LLC, a temporary staffing agency, assigned Lynn Grande to work as a nurse at Eisenhower Medical Center. After her eight-day assignment at Eisenhower ended, Grande became a named plaintiff in a class-action, wage-and-hour lawsuit against FlexCare. The staffing provider settled with the class, and Grande executed a release of claims that included standard language releasing the named defendant’s subsidiaries, affiliates, divisions, parent companies, etc. It did not, however, expressly release Eisenhower or the category of FlexCare’s clients.

Grande then sued Eisenhower in a separate class action, based on the same labor law violations, but on behalf of all nurses of any staffing agency employed and assigned to work at Eisenhower. After Eisenhower demanded indemnification from FlexCare, the staffing agency intervened in the Eisenhower class action, arguing that the judgment in the FlexCare class action precluded Grande’s claims against Eisenhower on res judicata grounds, and also that Eisenhower was a released party under the FlexCare settlement agreement.

The trial court ruled against FlexCare and Eisenhower on both grounds, and FlexCare appealed.

Read the post here.