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Can My Employer Preclude Me From Going To Court Simply Because the Handbook I Signed Contains A Mandatory Arbitration Provision?

Mandatory arbitration provisions in employee handbooks certainly are not new. Indeed, there likely is such a provision in your company’s handbook and, while you may not even be aware of it, chances are you agreed to it as a condition to employment and certainly before any dispute arose between you and your employer. Nonetheless, the provision exist, and you can be sure that if a dispute arises between you and your employer your employer will force you to air your dispute in arbitration rather than a court of law. While there are many theories driving your employer’s desire to avoid a trial by jury, the most common include the belief that arbitration is a quicker process, oftentimes less expensive then litigating through the court system and perhaps most advantageous to the employer – arbitration offers a private forum where unlawful employment practices are protected from public scrutiny.

Employee handbooks today are standard in businesses across the country, and new developments may mean Employers need to modify the language if in fact they want to keep disputes with their employees out of the courts – out of the public’s eye – and in an arbitral forum.

Notably, in a new ruling this month, the New Jersey Appellate Division has just made this task a little harder on your employer when it found an arbitration provision in an employee handbook unenforceable because the handbook disclaimed the document as forming a binding contract between the employer and employee.

In Morgan v. Raymours Furniture Company, Inc., the New Jersey appeals Court agreed with the trial court in refusing to let the employer have it both ways. In other words, the employer could not use the handbook as a sword when it suited the employer’s needs but a shield when it did not. Plaintiff Morgan filed an age discrimination and wrongful termination suit against his employer. The employer, relying on the handbook, moved to have the matter decided in arbitration, not a court of law. The trial court denied the employer’s motion noting the inconsistency of enforcing the arbitration provision while disclaiming the handbook as a binding contract between the parties.

So, what does this mean for you, as an employee? It means that even if the handbook you read and signed contains a mandatory arbitration provision, you may still be able to take your claim to the courts. You believe you were wrongfully terminated and you want a judge or jury to decide your fate, well don’t be too quick to give in? Talk to an experienced employment lawyer before you decide where to file, you may learn that your company’s handbook is not consistent with changing laws thus opening the door to civil court.

What does this mean for you, if you’re an employer? This means that if you want your employees to waive their right to a civil trial in the event of a dispute, it would be prudent to separate that clause out from the rest of the handbook. Be sure to make the waiver knowing, intelligent and voluntary on the employee’s part.

If you believe you have been wrongfully terminated or the victim of discrimination in the workplace, contact our Media Law Firm, and talk to our Pennsylvania Employment Attorney today.

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