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Wednesday, September 30, 2026

Worker Not Bound by Agreement with Sister Company of Hospital She Was Suing - SHRM

Takeaway: An arbitration agreement between an employee and a sister company of the hospital she was suing for employment bias could not compel arbitration of the employee's claims against the hospital.

An emergency medicine resident could bring her employment bias claims to court because the arbitration agreement she signed when she was hired was with a sister company of the hospital where she worked and not with the hospital itself, a federal appeals court ruled. The agreement with the sister company could not stretch to govern the resident's employment with the hospital, the court said.

Three corporations, comprised of two siblings—a hospital and a company that employed professionals working at the hospital—and the parent company, which owned health care companies that operated as wholly owned subsidiaries, entered into several agreements with the resident. One agreement was an employment contract between the resident and the hospital. Another was an arbitration agreement between the resident and the hospital's sister company. The corporations had drafted the forms.

During her employment, the resident alleged that a female supervisor had sexually harassed her. The supervisor denied the claims and asserted that the resident had assaulted her. The debate escalated until the resident was fired.

She then filed a complaint with the Pennsylvania Human Relations Commission and the Equal Employment Opportunity Commission (EEOC), alleging discrimination by the hospital. After...



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