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Does Your Employer's Arbitration Policy Comply With Basic Contract Principles?


The use of arbitration agreements by employers has become as commonplace as arbitration agreements imposed on consumers. A new trend is for employers to post their arbitration agreements online as part of their company policies. However, when employers post online and do not provide a hard copy or require written acknowledgment from their employees, there is a chance that those arbitration agreements will not be enforceable. Here is what you need to know.

The case of Doe v. Columbia North Hills Hospital

A Texas case decided in March of this year raised some important issues with regard to employment arbitration agreements. In that case, a female employee alleged that she was sexually assaulted by a male co-worker. Upon filing a lawsuit against her employer, the company moved to force arbitration of the employee’s claims. After the employer won the case at arbitration, the employee challenged the arbitration agreement.

The problem with the employer’s arbitration agreement

The basic problem with this arbitration issue is that the employee only ostensibly agreed to the agreement. The employer, Columbia Hospital, never issued a paper copy of the employee manual which included the arbitration agreement. Nor did the hospital require employees to physically sign the agreement or an acknowledgment of receipt of the agreement or employee policies.

Instead of paper copies, the employer simply posted the policies online and instructed employees to review them. Moreover, the review of the policies was part of the company’s orientation for new employees. Although employees were required to acknowledge receipt of “orientation” in general, nothing specifically referred to arbitration or the arbitration agreement.

Court of Appeals raises issue of basic contract principles

The appellate court raised the issue that basic contract principles require that parties to an agreement actually understand its terms. Those principles also require that parties to the agreement must receive notice of what they are signing. In the case of Columbia Hospital, the online version of the arbitration agreement did not provide adequate notice. More specifically, the word “arbitration” was not used in any way that would adequately warn employees that they were being asked to review an arbitration agreement as part of the online policies. Nor did the acknowledgment that the employees were required to sign.

Online access to the arbitration agreement is problematic

The appellate court also raised the point that even if there was sufficient notice provided, only posting the arbitration agreement online does not ensure that employees have actually reviewed it. Other courts have also reached the same result in this situation. Indeed, the Supreme Court of Alabama issued a similar decision last year. In that case, Moore-Dennis v. Franklin, the Court held that an employee who “could” access an online agreement is not the same as an employee actually accessing the online agreement.

In the Texas case, the employee admitted that she was told to review the online company policy about grievances, but her employer never mentioned that an arbitration agreement was included in those policies. Ultimately, she never reviewed the policy. As the Alabama Court pointed out, only the employee who actually reviewed the online policy had adequate notice of the arbitration agreement.

If you feel you have been the victim of discrimination or retaliation in the workplace, or if you have any other questions regarding your employment rights, please contact the experienced employment law attorneys at Michel | King . You can contact us either online or by calling us at (205) 265-1880. We are here to serve you!

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