CASE ADDRESSES ARBITRATION CLAUSE

Recently, the New Jersey Appellate Division Court addressed the issue of whether an employee can waive its right to litigation for an employment claim by signing an acknowledgment form contained in an employee handbook. In Morgan v. Raymours Furniture Company, Inc., the Plaintiff brought an action against his former employer alleging violations of the New Jersey Law AgainstDiscrimination and other employment related claims. Plaintiff claimed that when he approached Defendant alleging age discrimination in the workplace, the Defendant required that Plaintiff either sign a stand-alone arbitration agreement or be terminated.  When Plaintiff refused to sign the arbitration agreement, Defendant terminated Plaintiff.

The Defendant/former employer filed a motion to remove Plaintiff’s action from the Court and compel arbitration based upon the fact that Plaintiff previously signed an acknowledgment for his employee handbook which contained a provision that required any and all employment claims be subject to arbitration. Relying upon the New Jersey Supreme Court opinion in Atalese v. U.S. Legal Services Group, L.P., the Court in Morgan held that the Plaintiff did not “clearly and unambiguously” waive his right to sue by signing the acknowledgment for his employee handbook.  The Court noted that the Defendant’s employee handbook contained an explicit disclaimer providing that nothing contained in the handbook could create a promise or contractual relationship on the part of the company.  Moreover, the acknowledgement form for the employee handbook merely provided that the employee received and understood the contents of the company handbook.  Accordingly, the Defendant/former employer could not fairly contend that the Plaintiff/employee agreed to waive his right to sue and be subject arbitration.

The Defendant in Morgan claimed that the contents of its employee handbook did not create a contractual relationship with the Plaintiff.  However, Defendant then claimed that Plaintiff was bound by the arbitration provision contained in the very same handbook.  Defendant’s inconsistent position underscores the importance of having an independent arbitration clause whereby the employee can clearly and unambiguously waive his or her right to sue.

To learn more about arbitration clauses and employee handbooks, feel free to contact me at cheyer@heyerlegal.com or call me at (973) 696-8391, ext. 222.