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Arbitration Provisions in Employee Handbooks? If Done Right, Employees may be Compelled to Arbitrate

Many employers prefer to arbitrate employment disputes to save on legal expenses and bad publicity. Employees, however, often want to litigate in court in hopes of receiving a sympathetic jury.  So how does an employer get an employee to agree to arbitrate when they do not have a written employment agreement?  The 9th Circuit has held that if a mandatory arbitration provision is contained in your handbook and an employee knowingly consents to it, arbitration may be compelled.

In a recent case, Ashbey v. Archstone Property Management, Inc., an employee signed a policy handbook acknowledgment form in 2009 and 2010, where he confirmed he received directions on how to access the company’s online handbook, including its Dispute Resolution Policy, and confirmed it was his responsibility to understand it, including its Dispute Resolution Policy.   In addition, the company handbook clearly explained that disputes under company policies as well as those between the employee and the company would be resolved through arbitration.  The 9th Circuit distinguished this knowing waiver from other cases where the waiver was not as clear.

This is a great reminder that to consent to arbitration, it must be voluntary and done with knowledge.  Whether or not such waivers are enforceable in your jurisdiction should be analyzed prior to including such a provision in your handbook.

Brody and Associates regularly advises management on complying with state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.