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Supreme Court Expands Enforceability of Arbitration Policies in New Jersey Employment Law Decision

The New Jersey Supreme Court once again expanded  the enforceability of arbitration agreements under New Jersey employment law.  In its opinion in Skuse vs. Pfizer, Inc., the Court left in place the requirements necessary for agreements to arbitrate employee/employer disputes columns-round-300x201under New Jersey employment law, but in its application let the exceptions swallow the rule.

 

Pfizer’s Arbitration Agreement

Pfizer adopted an arbitration “agreement” – actually, more of a policy.  It was not a contract signed by an employee and Pfizer.  Rather, the employee was deemed to have agreed to arbitrate employment disputes if she continued working for Pfizer for sixty days after the policy’s effective date.  Employees were notified by email (to over 28,000 employees) about the policy and given a deadline to “acknowledge” having received it.  Whether the employees did or did not acknowledge receipt, they would be deemed to have “agreed” to the policy by their continued employment.  There was a training module with four slides which purported to explain the policy; one of the slides gave the employees the option to print a copy, but they were not given a copy by Pfizer; another thanked the employee for taking the training.  In the FAQ section of the training module employees were told that if they did not agree they would be fired.

 

Skuse’s Religious Conflict

Amy Skuse worked for Pfizer for four years as a corporate flight attendant.  She began employment several years before the policy became effective.  She acknowledged receipt and took the four slide training module.  At some point thereafter, Pfizer implemented a policy requiring flight attendants to be vaccinated for yellow fever.  Skuse was a practicing Buddhist who did not eat meat because of her religion.  She refused the vaccine because it contained meat products which would force her to violate her religious beliefs.  Her doctor sent a letter to her supervisors and requested an exemption.  They ignored these and told her she would have to take the vaccine or be fired, which caused her to have a breakdown.  She took medical leave but was not allowed to return because she had not taken the vaccine.  She was terminated on August 11, 2017.

 

Skuse’s Lawsuit

Skuse then sued Pfizer in State Superior Court for violating the New Jersey Law Against Discrimination by discriminating against her because of her religion, and by refusing to accommodate her religious beliefs.  The trial judge dismissed the suit and ordered the case to arbitration.  Skuse appealed and the Appellate Division reversed the trial court.  Pfizer and one of the supervisors appealed the case to the Supreme Court of New Jersey.

 

The New Jersey Supreme Court’s Opinion

The New Jersey Supreme Court reversed the Appellate Division and reinstated the trial judge’s decision dismissing the lawsuit and ordering it to arbitration.

The Court analyzed the case under the Federal Arbitration Act and the New Jersey Arbitration Act.  The Federal Arbitration Act provides that state contract law determines the enforceability of arbitration agreements, provided they do not treat arbitration agreements less favorably than other contracts.  Thus, New Jersey contract law determines if an arbitration agreement is enforceable, whether it arises in the employment context or elsewhere.

The Court first noted that there must be mutuality of assent, or a meeting of the minds between the parties.  Thus when an employee waives a right, particularly the constitutional right to go court, that waiver must be voluntary, and the person waiving their rights must understand what they are giving up.  While no particular words are required, the agreement must sufficiently explain what the person is giving up.  Here, while the arbitration “policy “ itself did not contain such explanation, FAQs and the four screen training module did explain that she would be giving up the right to a trial in court with a jury for any claim related to her employment.  Moreover, the Court agreed that  Skuse’s continued employment was sufficient evidence that she agreed.

The Supreme Court acknowledged that employees are inundated by email, but found that email was a sufficient means to disseminate the policy.  In fact, the Court explained that even if an employee did not read the email she would be held to it.  The Court explained that making email notice invalid would cause all contracts agreed to by email to be invalid.  However, this is nonsense.  There is an obvious difference between a contract negotiated by two parties, and an email to more than 28,000 employees which tells them what they will be deemed to have accepted.

The Supreme Court agreed with the Appellate Division that calling the explanation a “training module” was misleading, but found that this was not fatal to the policy.  This is difficult to harmonize with the Court’s ruling that employees would be bound by the email notice – if the characterization was misleading, how could an employee be faulted for not reading it?  Likewise, if it was misleading, how could an employee be deemed to have knowingly agreed?

Likewise, the Supreme Court held that Skuse “agreed” – a hard and fast requirement for there to be any binding contract – even though she only “acknowledged” receipt of the policy.  The Court explained that her continued employment overcame the wording.  However, there is a world of difference between agreeing to something and acknowledging it – the element of voluntariness…..

 

The Other Opinions

Justice Barry Albin concurred in the opinion because he found that the evidence showed that Skuse knew what she was doing and agreed.  However, he was clearly concerned with the majority opinion’s broad language.  He was also particularly concerned with the widespread take it or leave it nature of the policy.  He worried that this might be a contract of adhesion, in which a party with superior power forces a contract on one with less power, such as when one of the largest, richest companies in the world tells 28,000 employees in an email that they had to agree or be fired.  However, as the issue was not raised by Skuse, Justice Albin wrote that this was an issue for another case on another day.  Stay tuned.

Chief Justice Stuart Rabner dissented.  He argued that the training module did not clearly explain the rights which the employees were required to waive.  Likewise, he found that there was no clear and unambiguous assent – stating the obvious, he explained that “acknowledgement” is not “agreement.”  As the Chief Justice noted, “words matter.”  Likewise, he explained that agreement cannot be deemed, it must be freely given.

 

The Takeaways

  • Electronic signatures “agreeing” to arbitration policies are enforceable.
  • Even with New Jersey’s policy favoring arbitration, stretching “acknowledged” into “agreed” demonstrates that New Jersey courts will stretch language to enforce an arbitration policy.
  • If you sign for an arbitration policy, whether your signature is written or electronic, employees should assume that it will be binding.
  • However, under New Jersey employment law, arbitration policies and agreements still need to be clear about what arbitration is and what rights employees are waiving or they are not enforceable, although no exact words are necessary.
  • And employers need to remember that however tenuous the definition is, the employee must knowingly and voluntarily “agree.”

 

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