Appellate Court Re-affirms Employer-employee Arbitration Agreements

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Appellate Court Re-affirms Employer-employee Arbitration Agreements

By Tom Jardim

Disgruntled employees often ask these kinds of questions:

  • “Those awful things that he said about me in my annual review just aren’t true.  Is that allowed?”
  • “I was more qualified and better at my job than everyone else in my department, but I got fired.  Is that legal?”
  • “Yes, I signed that arbitration agreement, but I had been employed there for years, and they didn’t give me any additional compensation for signing it.  Is it still enforceable?”

The short answer to each of these questions:  “Yes, yes, and yes.”  Well, at least for the time being, that’s the answer.

The answers to the first two questions are easy to explain – the old employment law adage that an employee can be fired for a “good reason, bad reason or no reason at all” is still the law of the land.  All other things being equal, the undeserved, negative annual review and the termination of the most qualified employee are perfectly legal.

The last question – why do I have to arbitrate my claims against my employer if I wasn’t paid additional consideration to sign the agreement? – has been answered by the New Jersey Appellate Division, in a case called Jaworski v. Ernst & Young US LLP, ___ N.J. Super. ___, 2015 N.J. Super. LEXIS 120 (July 23, 2015).

In Jaworski, the employer argued that employers should be permitted to change their arbitration policies to adapt to changes in law, and they should not be forced to negotiate these changes with each employee each time they change their arbitration program rules.

The Appellate Division agreed with the employer and held that continued employment is “consideration” for the arbitration agreement, and furthermore, the employees’ continued employment was an implicit assent to arbitrate their employment disputes.  The Appellate Division reached this decision despite the fact that the employer amended its arbitration program several times and did not obtain the employees’ acknowledgment and acceptance of the amended arbitration program.

For employers, Jaworski simply re-states what has been long-standing law:  our courts favor arbitration agreements.  So long as the employee continues to be employed by the employer, this continued employment amounts to continued assent to arbitrate disputes, even if the employer makes unilateral changes to the agreement.

Attorneys who represent employees, however, cry foul because Jaworski permits employers to unilaterally change the arbitration agreement at any time, and there is no requirement that employers inform employees of such changes.

The attorney representing the employees in Jaworksi has vowed to appeal this decision to the New Jersey Supreme Court and hopes that the Court will weigh in on when an arbitration agreement can be unilaterally changed by one party, without notice to the other party.

If the New Jersey Supreme Court decides to hear the appeal, employers may get a different answer than the one they’ve been given about the enforceability of arbitration agreements.  Stay tuned.

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2017-01-02T17:00:50+00:00August 18th, 2015|Employment Law, JMS Employment Guidance|0 Comments

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