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“Acknowledging” Arbitration Policies May Cost Employers
February 8, 2019
“Acknowledging” Arbitration Policies May Cost Employers

Employers often implement binding arbitration policies as a way to avoid litigating claims in court. Many employers prefer arbitration because it can be confidential, less costly, and consume significantly less time than a trial. A recent decision from the New Jersey Appellate Division highlights how one word can make or break the enforceability of such policies.

In Skuse v. Pfizer (Jan. 19, 2019), the plaintiff-employee sued for discrimination. Pfizer filed a motion seeking to dismiss the complaint and compel arbitration in accordance with its arbitration policy. The key issue before the Court was whether the parties entered into a valid arbitration agreement.

Pfizer emailed employees its arbitration policy as a “training module” and instructed them to complete the “activity.” The training activity consisted of four slides. The first slide stated that, “as a condition of your employment with Pfizer, you and Pfizer agree to individual arbitration as the exclusive means of resolving disputes relating to your employment.” The second slide instructed employees to click on a separate tab to open and “review” the five-page “arbitration agreement.” At the end of the activity, employees were instructed to click on a box that stated, “click here to acknowledge.”

The critical issue for the Court was the term “acknowledge.” When reviewing arbitration policies, courts apply common state-law principles governing contracts. To find an arbitration agreement enforceable, there must be mutual assent, or, a “meeting of the minds.” A waiver of rights to bring a claim in court must result from an “explicit affirmative agreement that unmistakably reflects that employee’s assent.” The Court concluded that the “click box” asking employees to “acknowledge” receipt of the agreement did not satisfy this standard. The Court noted that:

The employee’s momentary click of a button or an electronic mouse lacked equivalent formality when that click was not tethered to and spotlighted with a clear and proximate direction that, by clicking the button, the employee is knowingly agreeing to waive his or her legal rights. The use of the words “agree” and “agreement” outside of the click box [the policy was labeled an “agreement” and the word appeared multiple times on the slides] is not sufficient...

The Court found that the click box must contain the word “agree” in order to be binding. The Court found that the policy would have been enforceable if it stated, for example, “click here to convey your agreement to the terms of the binding arbitration policy and your waiver of your right to sue.” The Court also implied that calling the process a “training” activity obscured its significance as an agreement and waiver of rights. In addition, the Court also found that a “consent by default” provision on the third slide of the activity, stating that anyone that did not click the box but continued working for the company sixty (60) days after receipt of the agreement was deemed bound by the policy, was insufficient.  

In light of this decision, employers should carefully review: (1) the language in arbitration policies; (2) how the policies are distributed; and (3) if employees are sufficiently agreeing to them. For more information and guidance on this topic, please contact the attorneys in Parker McCay’s Labor and Employment Department.

The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have

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