Arbitration agreements are generally favored by employers, since they allow employers to avoid the costly, time-consuming process of court litigation, the decisions of unpredictable juries, and the possibility of appeal.
When it comes to enforcement of arbitration agreements, the Federal Arbitration Act has been the law of the land since it was enacted nearly a century ago. The FAA was passed by Congress to reverse the longstanding judicial hostility to arbitration agreements at that time and to place arbitration agreements on the same footing as other contracts.
Despite the universal applicability of the FAA, a difference of opinion between New Jersey’s state and federal courts regarding the enforceability of arbitration agreements has emerged, particularly in cases involving employment and consumer contracts. New Jersey’s state courts, in many cases, appear to have applied a more stringent standard of review to arbitration agreements in consumer and employment contracts than their federal court counterparts. Indeed, it can be argued that many New Jersey state court arbitration enforcement decisions are inconsistent with the FAA’s mandates.
We have joined a case pending before the appellate division to help clarify the rules for employers in New Jersey that want to utilize arbitration agreements.
The matter reached appellate court on a dismissal of a claim arising from the New Jersey Law Against Discrimination (NJLAD) in favor of submitting the claim to arbitration for resolution. The employee, employed by Pfizer, Inc. followed a standardized eLearning module to learn about, review and acknowledge that she was agreeing to arbitrate her claim if she remained employed for at least sixty days.
Specifically, the Acknowledgement slide stated:
I understand that I must agree to the Mutual Arbitration and Class Waiver Agreement as a condition of my employment. Even if I do not click here, if I begin or continue working for the Company sixty (60) days after receipt of this Agreement, even without acknowledging this Agreement, this Agreement will be effective, and I will be deemed to have consented to, ratified and accepted this Agreement through my acceptance of and/or continued employment with the Company."
Employment continued fifteen months thereafter before it was terminated for disputed reasons.
The employee contends that Pfizer “tricked” her with the eLearning module to condition her continued employment on an agreement to arbitrate disputes arising out of employment. The module allegedly amounted to a fraudulent inducement or some form of unconscionable action by the company to get her to acknowledge the agreement.
New Jersey courts require an employee’s explicit, affirmative, and unmistakable assent for arbitration to be enforceable. In this case, the agreement was formed and acknowledged electronically
Clearly, a signature is the best evidence of explicit, affirmative, and unmistakable assent. Without one though, the question is what is sufficient as another explicit indication of assent.
One appellate court has held that employers may use an electronic employee arbitration agreement that contains hyperlinks to the full policy, so long as the page signed by the employee clearly obtains the worker’s consent and references that the policy is more fully described in another document.
Another court has found that merely clicking an acknowledgement page was insufficient for assent, without additional language like “and agree to the terms of the policy.”
Advocates and critics debate the question of whether the growth of arbitration represents a more efficient and equitable mechanism for resolving disputes that would otherwise clog the courts or an imposition of a mandatory arbitration mechanism on unwitting employees that undermines the statutory rights designed to protect them. However, arbitration and other forms of dispute resolution are embedded in modern workplace culture.
As we have written to the court:
There is certainly nothing controversial with the process to which [the employee] agreed to arbitrate her NJLAD claim and the trial judge engaged in a straight forward analysis which led to a logical result – that [the employee] could not back out of an arbitration agreement to which she duly consented.”
Stay tuned.