Problems can occur, however, when the arbitration agreement is contained in an employee handbook, especially when it is a handbook the employer retains the right to unilaterally change. If an employer has the unilateral, unrestricted right to modify the handbook, and the arbitration agreement is in the handbook, there is a good chance a court would find the agreement unenforceable.
The end result is that a court would, in all likelihood, refuse to enforce the arbitration agreement and the employee would be free to pursue her claims in court. To be safe, employers should not include arbitration agreements in their employee handbooks. Instead, arbitration agreements should be stand-alone documents.
June 19, July 15, , the company was faced with a collective action lawsuit under the federal Fair Labor Standards Act FLSA filed by a former employee who alleged that she, and all others similarly situated to her, were not paid for all of the hours worked and overtime earned.
The company immediately filed a motion to compel arbitration, arguing not only that the employee agreed to arbitrate her claims, but also that, by virtue of a delegation clause contained in the agreement, she also agreed to arbitrate threshold issues relating to the arbitration agreement, including whether her claims were subject to arbitration in the first instance.
It was therefore likely anticipated that the court would defer to the arbitration agreement given the current favorable judicial climate relating to the enforcement of arbitration agreements. This Handbook was not physically distributed to, or signed by, the employee. Rather, during her employment, the employee was twice required to use a computer mouse to click on the Handbook, which included the agreement to arbitrate and delegation clause.
When the Handbook was clicked, the employee would also have received a link to open a full copy of the Handbook, but there was no evidence presented that she ever did so. Moreover, the employee denied ever actually reading the arbitration policy. Dean Witter Reynolds, Inc. The court looked to determine whether the company established all of the elements of an enforceable contract under governing Missouri law, first with respect to the delegation clause—a severable antecedent agreement—and ultimately with respect to arbitration of the underlying claims.
Specifically, the court observed that there must be a definite offer, unequivocal acceptance and consideration for either agreement to be enforceable. Ultimately, the Eighth Circuit concluded that no contract to arbitrate any issue was formed by the Handbook. In many states, including Missouri, the mere continuation of employment is not manifestation of assent to an arbitration agreement. It is possible to maintain an enforceable mandatory arbitration program; indeed, federal law has never been more favorable to enforcement of agreements to arbitrate employment disputes.
For employers to effectively implement a mandatory arbitration program—including those with a class and collective action waiver—it is not enough to tell employees in a handbook that they must arbitrate and to simply distribute an arbitration policy without developing further proof that the employee has accepted the policy as a contractual commitment to arbitrate covered disputes.
A contractual offer to arbitrate can still be presented in an employee handbook. However, that offer must be clear and definite, which is a matter calling for careful drafting of the handbook, including its references to arbitration, and elimination or limitation of disclaimers contained in the handbook that would fuel an argument that the parties never entered into a binding contract. The arbitration provision was substantively unconscionable because it allowed employees no right to discovery during the arbitration process.
The Sparks case is a good reminder that employment arbitration agreements should be separate, stand-alone agreements between employer and employee. Foundation Health Psychare Services, Inc. For the safety of our employees, we are all working remotely from home and using Zoom, Teams, and other technologies to conduct telephone and video meetings and conferences.
We are also proceeding with depositions and mediations using these technologies, where possible. Please do not send us any mail via USPS or overnight delivery until further notice. Please email or call us instead.
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