In order to be valid and enforceable, an arbitration agreement must have the following three elements: (1) it must be in writing; (2) it must be unambiguous as to the intent to submit disputes or controversies to arbitration; and (3) there must be bilateral consideration.
Appellant employee was 17 when he went to work on the employer's automobile lot, and he was injured when a coworker sprayed him on the buttocks area with an air hose. Appellant brought an action against the appellee employer alleging hostile and unsafe working environment and sexual assault and sexual discrimination. Appellant employee sought review of an order from the Circuit Court of the First Circuit (Hawaii), which entered judgment in favor of appellee employer and granted a motion to compel arbitration, in accordance with an arbitration provision contained in an employee handbook, and a stay of the employee's action against the employee arising from injuries the employee received while performing his duties. The court vacated the trial court's order staying the employee's action and compelling arbitration and remanded the case for further proceedings.
Was appellant contractually bound by an arbitration provision?
In vacating the order compelling arbitration, the court found that, even though the protections of the infancy doctrine were incorporated into Hawaii's child labor law, the general rule that contracts entered into by minors were voidable was not applicable in the employment context and that the employee, therefore, was not entitled to disaffirm his employment contract. Next, applying a three-part test, the court concluded that the provision was not enforceable because there was a lack of an unambiguous intent to submit to arbitration, noting that there was no evidence to show that the employee was informed of the provision, let alone that he would be bound by it. The court further noted that, even if intent had been shown, the employer's unilateral right to modify the handbook indicated that the arbitration provision was unenforceable for lack of consideration and mutuality.