Courts have blessed written agreements between employer
and employee to submit federal discrimination claims to arbitration. Here
is an example.
But, there's legal and then there's doing
right. Below, how one employer got it wrong. Very wrong. Plus, what
you can do to make sure that your business does not make the same mistake...
v. River Oaks Imports, Inc. the plaintiff worked for the defendant-employer
for just under a year. Shortly after he began his employment, the plaintiff
received an Employee Handbook and signed an acknowledgment, which contained the
following arbitration clause:
I understand and voluntarily agree that any
disputes regarding the terms of this pay plan or my employment or termination
from employment (including claims of discrimination and/or harassment) will be
resolved exclusively in accordance with binding arbitration governed by the
Federal Arbitration Act. . . . I further understand and voluntarily agree that
this alternative dispute resolution program shall also cover claims of
discrimination or harassment under Title VII of the Civil Rights Act of 1964,
as amended. Although I understand that signing this arbitration agreement is
not required as a condition of my employment, I desire to take advantage of the
benefits of arbitration and understand that I give up the right to trial by
jury and instead will have my claims resolved by a retired court Judge.
After the plaintiff left his job, he asserted
federal-discrimination claims against the defendant in federal court, and the
defendant moved to stay the case pending arbitration.
Is the arbitration agreement enforceable?
I'll give you a hint, no.
As with any contract, for an arbitration agreement to be
binding on both parties, there must be an offer, acceptance, and consideration
(that's legal-speak for a give and take). Therefore, for an arbitration
agreement to be binding, the employee must receive some benefit or the employer
must have suffered some detriment.
Generally, employment can be consideration for an
employee's agreement to arbitrate. However, in this particular case, the
arbitration that the plaintiff signed stated that "this arbitration
agreement is not required as a condition of my employment."
Plus, the subject agreement did not bind the employer in
the same way it did the employee. Notice all of the "I understand"
and "I give up the right" and "my claims". The court could
not read that language to bind both the employee and the employee.
Based on the lack of consideration and the do, re, me,
me, me, me, me, the court held that the agreement to arbitrate was
unenforceable and allowed the plaintiff to pursue his federal discrimination
claims in court.
Don't make the same mistake.
This article was originally published on Eric B. Meyer's blog, The Employer
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