A pattern shows up over and over in unpaid overtime cases. A worker gets placed through a staffing agency, a courier company, or a labor broker. The worker signs that company's paperwork, which calls the worker an independent contractor and includes an arbitration clause. Then the worker spends every working day at a different company, the one that assigns the routes, sets the pay, and decides the schedule.
When the worker sues that second company for unpaid overtime, the second company reaches for the first company's arbitration clause. It asks the court to move the case out of federal court and into private arbitration, even though it never signed the agreement it is holding up.
That move fails more often than workers expect.
Can a company force me into arbitration over a contract I signed with a staffing agency?
Usually it cannot, and the burden sits on the company.
An arbitration agreement is a contract, and a contract ordinarily binds the people who signed it. A company that never signed your agreement has to prove it earned the right to enforce it. Texas law allows six routes: incorporation by reference, assumption, agency, alter ego, equitable estoppel, and third-party beneficiary. The company must fit inside one of them.
A court decides this, not an arbitrator. The question goes to whether an arbitration agreement exists between you and that particular company, and that is a gateway question for the judge.
I signed an arbitration agreement with a staffing company. Can I still sue the company I actually worked for?
Often you can.
The Fifth Circuit addressed this in Newman v. Plains All American Pipeline, L.P., 23 F.4th 393 (5th Cir. 2022). A pipeline inspector signed an employment agreement containing an arbitration clause with a company that staffed inspectors to client projects. He then brought an overtime collective action against the client company, not the staffing company. The client company moved to compel arbitration using the staffing agreement. The court refused.
The reasoning was that the staffing company and the client company were independent businesses that had not been treated as a single unit, and no reasonable person signing the staffing agreement would have anticipated being forced to arbitrate against the client company. The test looks for consent, not for a convenient connection between two companies.
What does a company have to prove to enforce an arbitration agreement it never signed?
The theory companies reach for most often is called intertwined claims estoppel. It has two elements, and a company that fails either one loses the motion.
The first element is a close relationship between the company seeking arbitration and the company that signed your contract. Texas courts want more than two businesses that do business together. The Texas Supreme Court explained in Jody James Farms, JV v. Altman Group, Inc., 547 S.W.3d 624 (Tex. 2018), that a close relationship typically requires some corporate affiliation, meaning shared ownership or common control, rather than a working relationship. A company that buys another company's services is a customer, and a customer relationship does not satisfy this element.
The second element is that your claims are intimately founded in and intertwined with the contract. If you could bring the same claim without the contract, your claim is not founded in it.
A federal court in San Antonio applied both elements in August 2026 and denied a pharmacy's motion to compel arbitration in an overtime case brought by delivery drivers. The drivers had signed independent contractor agreements with a courier company, and the pharmacy had signed nothing. The court found that the courier company kept its own separate corporate identity, that the two companies shared no common control or corporate affiliation, and that they dealt with each other as independent participants in a business transaction. The pharmacy argued the courier company was not a true staffing company but a captive delivery operation that served only the pharmacy. The court held that the distinction does not exist in the case law and would not change the outcome if it did.
Does an arbitration clause cover my overtime claim if the claim comes from federal law?
The statutory source of your claim generally works in your favor here.
Your right to overtime comes from the Fair Labor Standards Act. It runs against whoever employs you, and it does not depend on a contract you signed with a third company. Courts have used that distinction to refuse to compel overtime claims to arbitration, on the reasoning that a worker could bring the identical claim if the contract had never been signed. A claim that survives the contract's disappearance is not intertwined with the contract.
One procedural point is worth knowing. If a court does decide your claims belong in arbitration, and you asked the court for a stay, the court must stay your case instead of dismissing it. The Supreme Court held this in Smith v. Spizzirri, 601 U.S. 472 (2024). A stay keeps your case on the court's docket and preserves your ability to come back.
What this means if you were paid as a contractor
Two separate labels get used to talk workers out of overtime claims. The first is the independent contractor label, and the second is the arbitration clause. Neither one decides anything on its own.
Whether you are an employee under federal law depends on the economic reality of how you worked, including who controlled your schedule, who set your pay, whether you could realistically work for anyone else, and how permanent the arrangement was. What the paperwork calls you does not settle it. Whether an arbitration clause reaches your case depends on who signed it and what your claim actually rests on.
Federal overtime claims also have a deadline. You generally reach back two years, or three years when the violation was willful, and that window moves forward every day you wait. Weeks that fall outside the window stop being recoverable.
If you signed paperwork with a staffing agency, a courier company, or a labor broker, and you worked more than 40 hours a week for a company that did not pay you overtime, call me at (512) 799-2048. Consultations are confidential and there is no charge for the initial consultation.
Douglas B. Welmaker Welmaker Law, PLLC 505 E. Magrill St., Longview, Texas 75601
This article gives general information about federal overtime law and does not give legal advice about your situation. Each case turns on its own facts, and the outcome of any case described here does not predict the outcome of another case. Reading this article does not create an attorney-client relationship.