Employers can no longer count on private arbitration when sexual harassment is on the docket

Employers love arbitration agreements. They keep disputes private and out of court.

Unless, that is, sexual harassment is in the case.

An Ohio appellate court just made that crystal clear in Hansbrough v. Marshall Dennehey.

Federal appeals court rejects reliability of electronic signatures on employment agreements

During a webinar I recently conducted on employee handbooks, someone asked me a question about the best practice between wet signatures vs. e-signatures on handbook receipts. I answered that either was fine, but at least with the digital footprint of an e-signature you avoid the disingenuous "that's not my signature," or the "I don't ever remember signing that" we sometimes hear from plaintiffs in deposition. 

Then I read Barrows v. Brinker Restaurant Corp.

A step in the right direction to ending workplace sexual harassment

When is the last time you recall Congress agreeing on anything? Well, it happened last week, when the Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (full text here.)

Simply, once signed by President Biden (which should happen imminently), any agreement that requires an employee to submit a sexual harassment claim to private arbitration, or waive their right to participate in a class or collective action, would be invalid and unenforceable. 

Ohio appellate court refuses to enforce employment arbitration agreement as “unconscionable”

An agreement between an employer and its employees requires an employee to submit to “final and binding arbitration … any actual or alleged claim or liability, regardless of its nature” (other than claims for unemployment or workers’ compensation, or for violations of the National Labor Relations Act).

An employee sues in court for race discrimination and retaliation, and the employer moves the court to compel the employee to arbitration his claims pursuant to their agreement.

7th Circuit surprises by siding with NLRB on arbitration agreements

It’s been two and a half years since the 5th Circuit, in D.R. Horton, rebuked the NLRB’s prohibition on mandatory arbitration clauses. Since, however, the NLRB has been undeterred, finding, in case after case, that employers’ mandatory arbitration agreements (with and without class-action waivers) violate employees’ rights to engage in protected concerted activity under section 7 of the National Labor Relations Act.

Thus, when I heard that the traditionally business friendly 7th Circuit would be taking up the same issue, I figured the NLRB would go 0 – 2 in the federal courts of appeals on this issue. Boy was my prognostication radar off.

Some thoughts on arbitration agreements for employees

Recently, the Cuyahoga County Court of Appeals stymied an attempt by an employer to enforce an arbitration agreement against an employee. The employer was a Burger King franchise and the employee was a former employee claiming she was raped by her supervisor in the restaurant’s men’s bathroom. The court, in Arnold v. Burger King, concluded that, for various reasons, enforcing the agreement against her and requiring her to arbitrate her claims would be unconscionable.

Arnold notwithstanding, arbitration continues to the favored method used by employers to limit their potential exposure in front of a jury. I, however, am not a fan of arbitration agreements. Conventional wisdom suggests that arbitration is quicker and cheaper means to resolve lawsuits. Research, however, suggests that the opposite may better match reality.

lf arbitration is neither faster or less expensive than court, but you still want to foster expediency and limit the risk of a runaway jury verdict, consider two possible alternatives.

Contractual Waivers of Jury Trials

First, employers can have employees sign agreements waiving the right to ask for a jury in any subsequent legal disputes. More than 20 years ago, in K.M.C. Co. v. Irving Trust Co., the 6th Circuit stated: “It is clear that the parties to a contract may by prior written agreement waive the right to jury trial.... [T]he constitutional right to jury trial may only be waived if done knowingly, voluntarily and intentionally.” The contract should clearly and unambiguously advise the employee that by signing the agreement the employee is giving up any and all rights to have any claims related to his or her employment raised by a jury. The more broadly the waiver is drafted, the more likely it will cover an employment-related claim, provided it is otherwise knowing and voluntary.

Agreements to Shorten the Statute of Limitations

Secondly, employers can attempt to limit the amount of time employees have to assert employment claims. In Thurman v. DaimlerChrysler, Inc. [pdf], the 6th Circuit held that a clause in an employment application limiting the statutory limitations period for filing a lawsuit against the employer was valid. Thurman’s employment application with DaimlerChrysler contained a clause waiving any statute of limitation and agreeing to an abbreviated limitations period in which to file suit against the employer. Specifically, the clause stated:

READ CAREFULLY BEFORE SIGNING I agree that any claim or lawsuit relating to my service with Chrysler Corporation or any of its subsidiaries must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.

The Court held that the abbreviated limitations period contained in the employment application was reasonable, and that all of Thurman’s claims against DaimlerChrysler were time barred by the six-month limitations period. The Court paid particular attention to the “read carefully before signing” language, and noted that it was in bold and placed conspicuously directly above Thurman’s signature acknowledging that she read and understood the document. It also found the specific language used was clear and unambiguous.

The advantage of using these types of clauses is that you can limit the duration of potential liabilities. For example, in Ohio employees have 6 years to file discrimination claims (other than age) under R.C. 4112.99. A clause such as the one in Thurman would shorten that time frame from 6 years to 6 months, a dramatic improvement.

The best time to settle a case

I’ve long believed that the best time to settle a case is while summary judgment is pending. It’s when both sides have the most risk. The employer has the risk of a jury trial if the court denies the motion, and the employee has the risk of walking away with nothing if the court grants the motion.

Case in point—Webb v. Kentucky St. Univ. (6th Cir. 3/15/12) [pdf]. In Webb, the court granted the employer’s summary judgment motion while the parties were actively mediating the case. On appeal, the plaintiff argued that court abused its discretion in granting the motion while mediation was ongoing, which, in the plaintiff’s words, “makes a mockery of the mediation process.” The court of appeals disagreed:

Where, as here, the district court properly granted the summary judgment motion, the mediation process is not “sabotaged.” Instead, the district court does not waste judicial resources by preparing for trial where no genuine issue of material fact exists and the opposing party is clearly entitled to judgment as a matter of law.

The next time you receive settlement resistance from a plaintiff while a motion for summary judgment pends, you might want to forward a copy of Webb. Maybe it will grease the skids to a resolution.

NLRB trumps U.S. Supreme Court on class action arbitrations

Last year, the U.S. Supreme Court, in AT&T Mobility v. Concepcion, held that a business could compel a group of individuals to waive their right to file a class action lawsuit and instead arbitrate their collective dispute. Employers rejoiced, believing that they finally had the weapon they needed to battle the scourge of wage and hour class actions. Last Friday, however, the NLRB struck a blow against this apparent victory.

In D. R. Horton, Inc. [pdf], the NLRB held that an arbitration agreement violated the National Labor Relations Act’s protections for employee concerted activity. The facts are pretty straight-forward. The employer required all of its employees, as a condition of their employment, to sign a master arbitration agreement, under which they agreed:

• to submit all disputes and claims relating to their employment to final and binding arbitration;
• that the arbitrator “may hear only … individual claims,” “will not have the authority to consolidate the claims of other employees,” and “does not have authority to fashion a proceeding as a class or collective action or to award relief to a group or class of employees in one arbitration proceeding”; and
• to waive “the right to file a lawsuit or other civil proceeding relating to … employment with the Company” and “the right to resolve employment-related disputes in a proceeding before a judge or jury.”

The NLRB concluded that the agreement “unlawfully restricts employees’ Section 7 right to engage in concerted action for mutual aid or protection,” and held that the employer “violated Section 8(a)(1) by requiring employees to waive their right to collectively pursue employment-related claims in all forums, arbitral and judicial.”

A few key points to make about this case:

1. This case continues the trend (as we’ve seen in the social media cases—more on this tomorrow) of the NLRB pursuing protected, concerted activity cases in non-union workplaces.
2. The NLRB did not concluded that all class action arbitration agreements are invalid, but merely those that leave employees without a collective remedy. An arbitration agreement, for example, that permits for a judicial filing would still be lawful. (But, then again, wouldn’t that fall-back nullify any benefit to be gained from the arbitration agreement in the first place?)
3. This decision likely is not the last we will hear on this issue. This case is almost certainly headed to the 11th Circuit Court of Appeals. Depending on that result, it will be curious to see if the Supreme Court picks up the ball to reconcile this case with AT&T Mobility. Until then, employers should tread carefully in trying to implement or enforce class action arbitration agreements.

Can a handbook policy bind an employee to arbitration? 6th Circuit says no.

We spend a lot of time debating the respective merits of fine point of the law. The reality, however, is that judges are people too. Despite their training, robes, and gavels, the decision of many cases comes down to one key fundamental question: did one side treat the other side fairly? Courts don’t like litigants that try to pull a fast one.

Hergenreder v. Bickford Senior Living Group [pdf] provides a perfect example. It also illustrates why arbitration of employment disputes often is a losing battle.

Bickford filed a motion to compel Hergenreder to arbitrate her disability discrimination case under an arbitration clause buried in its employee handbook. Section 12 of the 16-section handbook—for which Hergenreder had signed an acknowledgment that she had read and understood its terms—provides as follows: “Dispute Resolution Process  Please refer to the Eby Companies Dispute Resolution Procedure (DRP) for details.” The separate, 20-page DRP, in turn, required that employees submit all claims to arbitration. The employee testified that she never saw the DRP, let alone signed for it.

The court concluded that simple inclusion of a reference to the DRP in the handbook did not constitute a binding and enforceable contract between Hergenreder and Bickford to arbitrate all employment claims:

The best Bickford can say is that Hergenreder was informed that, for “Employee Actions,” she should “refer” to the DRP. In Bickford’s view, Hergenreder “was or should have been aware of the DRP and so is bound by it.” Yet she was not required to refer to the DRP; the “handbook does not constitute any contractual obligation on [Hergenreder’s] part nor on the part of Bickford Cottage[.]”

[T]here is no evidence that the DRP was “posted” in a place—either physical or electronic—available to Hergenreder, that there were meetings at which Hergenreder was notified of the policies, or that Hergenreder was aware of the DRP at all…. Bickford does not argue that it actually distributed or made the DRP available to Hergenreder.

Employers, if you are going to require employees to arbitrate their claims against you, do yourself a favor and at least have the employee sign a separate arbitration agreement. You might succeed on enforcing an alternative form of an alternative dispute resolution agreement (such as a handbook clause). But, you will spend the money you perceive you are saving through arbitration by trying to enforce your right to arbitrate.

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

“May” I have another (lawsuit)? One word sinks employer’s efforts to force arbitration

It’s no secret that I’m not a fan of arbitration of employment disputes. Conventional wisdom says that binding arbitration keeps down costs and speeds up resolutions. I’ve yet to be convinced. Many employers, though, continue to drink the arbitration Kool-Aid by requiring employees sign alternative dispute resolution agreements as part of their employment. Sherwin-Williams appears to be one of them. Its choice of one key word in its Problem Resolution Procedures, however, cost the paint company its chance to litigate an ex-employee’s age discrimination claim in its forum of choice.

The word at issue in Hyde v. Sherwin-Williams Co. (8/25/11) [pdf] is “may.” Sherwin-Williams’s Problem Resolution Procedures provide:

These procedures may be used by employees to challenge the unresolved differences regarding application of Company policies, procedures or practices which affect their employment situation. These procedures are intended to be an exclusive, final and binding method to resolve all covered claims to the fullest extent permitted by law. Failure to use these procedures may preclude employees from pursuing any other legal right they may have in court or in other forums.

An Ohio appellate court concluded that the use of the word “may” disposed of Sherwin-Williams’s attempt to force an ex-employee to litigate his age discrimination claim in court:

We find that Sherwin-Williams’ repeated representations that an employee’s failure to follow the PRP “may” preclude that employee from seeking redress in outside forums expressly contradicts appellants’ position that the procedures outlined in the PRP are the exclusive method for resolving employee disputes. By virtue of the language used … appellants implied that there would be circumstances where an employee would not be prevented from pursuing resolution of their legal claims in outside forums, i.e., that the PRP procedures are not mandatory, final, or binding.

What’s worse for Sherwin-Williams is that 8 years ago another panel of the same appellate court reached the same conclusion about the same language in a prior version of the same PRP.

What’s the takeaway from this case for employers? In drafting agreements and policies, words matter. If you mean “must,” say it. Don’t say “may” (especially when a court has already told you that “may” doesn’t pass muster).

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Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

Do you know? Does mandatory arbitration of employment disputes work?

Yesterday, in Rent-A-Center v. Jackson [pdf] the U.S. Supreme Court held that the issue of the enforceability of an arbitration agreement should be decided by the arbitrator and not by a court. As fellow employment Dan Schwartz, of the Connecticut Employment Law Blog, tweeted moments after the decision’s announcement, “SCOTUS continues to heart arbitration provisions in employment cases.”

The bigger question, though, is whether employers should continue to heart arbitration of employment cases. The Winter 2010 edition of the ABA Journal of Labor & Employment Law has an article entitled Is Mandatory Employment Arbitration Living up to Its Expectations? A View from the Employer’s Perspective, by Charles Coleman, in-house counsel at Raytheon. Mr. Coleman argues that many companies are not all that satisfied with choosing mandatory arbitration of their employment disputes.

One of Mr. Coleman’s central arguments is that arbitration may not be faster or less expensive than traditional litigation. And, he has the numbers to bear this out. In a study of 19 recent employment cases filed against one company, Mr. Coleman discovered that arbitration is 30% more expensive and takes nearly 25% longer:

• The average costs and fees in an employment arbitration were $102,338, as compared to $70,491 in litigation.
  
• The average life cycle of an employment arbitration, from filing to decision, was 21 months, as compared to 17 months in litigation.
  

While this is a small sample-size, it at least illustrates that the premise that arbitration is a quicker and cheaper way to resolve employment disputes may be faulty. Aside from expense-control and speed-of-resolution, the other reason that employers favor employment arbitrations is to guard against runaway jury verdicts. But, if the premise is faulty as to cost and speed, then businesses should be questioning whether there are other ways to insure against juries.

To this end, let me suggest that instead of arbitration agreements businesses consider implementing jury trial waivers as a condition of employment. A jury trial waiver agreement both eliminates the risk of a runaway jury’s high damage award, and also preserves all appeal rights that arbitrations virtually eliminate.

There is no hard and fast answer to whether your business would be better served by arbitrations, bench trials, or some other solution. But, there are options other than the conventional wisdom that businesses should be arbitrating their employment claims.

The art of the apology

Those who’ve been reading for awhile know that I grew up in Philadelphia. I am a proud survivor of the Philadelphia public school system. When I was in 11th grade at George Washington High School, I awoke one winter morning to find 9 inches of snow and ice covering the roads and sidewalks. Anyone who has any experience with any large metropolitan school district knows that they are as likely to close for weather as France is to win a modern war. So, it was no surprise that schools were open for business that morning.

I was none too happy about having to trudge the mile to school, but my parents both taught in the district, and if they had to go to work, I had to go to school. My dad, though, had what appeared to be a brilliant idea. “Why don’t you call the superintendent and let her know your feelings about school being open?” (In retrospect, maybe he was having me do his dirty work for him.) So, I got the White Pages out of the hall closet (no Internet in 1989) and found the number for the office of the superintendent. It being 6:30 in the morning, all I got was her answering machine. Here’s the message I left:

My name is Jonathan Hyman and I am a junior at George Washington High School. I was not happy to learn that schools were open this morning. Busses aren’t running, and the roads are slippery and dangerous. I do not feel that it is safe to go to school. If I get to school and find that none of my teachers are there, I am going to be very pissed off.

Direct, but innocuous enough, I thought. Which is why I was somewhat surprised when the principal pulled me out of my 4th period health class for me to talk to someone from the superintendent’s office demanding justice for my obscenities. I assured the principal that I had not used any obscenities, but one man’s “pissed off” is another’s f-bomb, I suppose. After a rational conversation (from my end), the superintendent’s representative bottom-lined it for me—I could either apologize or face expulsion. I did not think being expelled from school would bode well for my future, so I apologized. The irony of the whole situation was that when I called to apologize, I again got the superintendent’s answering machine. When I finally met her the following year at the seniors’ honors banquet, I was pretty sure she had no idea who I was or what had happened the prior winter.

What, you may be asking yourselves, does this story from my youth have to do with employment law? It’s as simple as this. Sometimes, all someone wants to resolve a problem is an apology. It's easy to dig your heals in and fight, especially when you are being accused of something as insidious as discrimination. Those fights will cost you hundreds of thousands of dollars in legal fees. Most times, those fights are necessary. Sometimes, though, a simple apology will suffice to restore the status quo. 21 years ago, the future lawyer in me felt that my 1st amendment rights were being trampled. But, it was not worth vindicating those rights if it put my chances at college admission in jeopardy. The next time you are dealing with a sensitive situation with an employee, before shifting into battle mode stop and ask yourself whether a sincere apology will solve the problem. It may be one of the hardest, and best, decisions you will ever make.

Do your employees really know what they are signing? Enforcing waivers of judicial rights

In 2004, in Thurman v. DaimlerChrysler, the 6th Circuit upheld an employers right to contractually limit an employee’s timeframe to file a discrimination claim in court. On Monday, in Alonso v. Huron Valley Ambulance, the same court held that such waivers and limitations must be knowing and voluntary to be valid.

Huron Valley Ambulance used two tools to attempt to limit exposure to discrimination and other employment-related claims: a four-step internal grievance process and a six-month statute of limitations. Both are set forth in the employment application:

PLEASE READ THE FOLLOWING BEFORE SIGNING

Any dispute arising out of or in connection with any aspect of my employment by the Company, or termination thereof, including by way of example but not limitation, disputes concerning alleged civil rights violations, breach of contract or tort, shall be exclusively subject to review by the Grievance Review Board. Any decision of the Review Board shall be binding to both parties, and enforceable in circuit court….

I further recognize that if employed by the Company, I agree, in partial consideration for my employment, that I shall not commence any action or other legal proceeding relating to my employment or termination thereof more than six months after the termination of my employment and agree to waive any statute of limitations to the contrary.

Upon starting employment, HVA provided all employees a copy of its Operations Policies and Procedures Manual, which described the Grievance Review Board and its process in detail.

Alan Alonso and Kimberly Alonso both worked for HVA. They read and signed the employment application, and received copies of the Operations Policies and Procedures Manual, for which they signed a receipt. Nevertheless, the 6th Circuit held that HVA could not bind the Alonsos to either the grievance process or the shortened statute of limitations because the waivers of their rights were not “knowing and voluntary.”

The 6th Circuit took no issue with the language used in the waivers or the Alonso’s ability to understand what they signed. Instead, the 6th Circuit was troubled by the lack of information and detail about the Grievance Review Board given to the Alonsos at the time they signed the employment application:

At the time the Alonsos signed waivers of their rights to a judicial forum, they had no idea what the Grievance Review Board process entailed. They were never informed of their right to revoke their waiver. They were not given any documentation regarding the process until almost a month after they began their employment with HVA. Even then, the document they were given described the process in general terms, and pointed them to a website where they could find additional, more detailed information. They cannot be said to have knowingly and voluntarily waived their right to a judicial forum when they were not informed of the alternative procedures until a month after they began working for HVA.

The court glossed over the question of the enforceability of the shortened statute of limitations, simply finding:

Because we have already found that the Alonsos did not knowingly, intelligently, and voluntarily sign the waivers included in their employment applications due to the fact that they were not given any information regarding the Grievance Review Board procedures, we hold that their statute of limitations waivers were, likewise, invalid.

Given the scant analysis of the statute of limitations issue, Thurman v. DaimlerChrysler is likely still good law. Employers should still be able to limit the time in which employees can bring a lawsuit, provided that the waivers meet the requirements of being knowing and voluntary.

What other lessons can employers learn about waivers of judicial rights in employment agreements?

1. Waivers should be obvious and conspicuous. Both the Thurman court and the Alonso court pointed out that the waivers were set off by headings in all caps and bold type, letting the employees know what they were about to read was important and should be read with care before signing.

2. Employees should be given time to consider the waiver before signing it, should not be pressured or required to sign the waiver on the spot, and should not be denied the right to seek legal counsel before signing, if they choose.

3. Waivers should be understandable to those signing them. They should be written plainly and without legalese. Also, employees should be provided waivers in their primary language, or with the services of someone who can translate.

4. If you are requiring employees to submit disputes to an internal dispute resolution process, you must provide detail about the process at the time the waiver is signed for the waiver to be valid and enforceable.

Waivers remain an effective tool to limit your risk from lawsuits by employees. The Alonso case just creates more work for you and your lawyers in making sure that they will withstand judicial scrutiny.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Think before having employees sign that arbitration agreement

Yesterday, the Supreme Court issued its opinion in 14 Penn Plaza v. Pyett, which enforced a provision in a collective-bargaining agreement that required union members to arbitrate statutory discrimination claims. My fellow bloggers have already provided some thoughtful analysis of this opinion – Michael Moore at the Pennsylvania Labor & Employment Blog, Michael Fox at Jottings By An Employer’s Lawyer, and Richard Bales at the Workplace Prof Blog.

The bigger question for employers to think about, though, is whether arbitration of employment claims makes business sense. Companies and their lawyers often use mandatory arbitration of employment claims for two reasons: (1) as a cost-effective alternative to court; and (2) as an insurance policy against runaway jury verdicts.

In my experience, however, arbitration can prove just as costly as court. More and more arbitrators are allowing plaintiffs to engage in discovery that is nearly as expansive (and expensive) as what is permitted by trial courts. Additionally, employers have to add into the equation the cost to file the claim, which the employer usually shares. With the American Arbitration Association, these fees can run anywhere from $950 to a cap of $65,000. These fees do not include the arbitrators’ time, which often exceeds $500 per hour, and includes all pre-hearing conferences, discovery and motion practice, the actual hearing time, and the drafting of the opinion. It is not hard to see how in many cases the defense costs associated with arbitration outweigh defense costs in a traditional court proceeding.

Given these high costs, there is a much better alternative to hedge against a runaway jury verdict – contractual jury trial waivers. A properly drafted jury trial waiver accomplishes the following goals:

1. No appeal rights are lost. Judicial review of arbitration awards is very narrow. An appellate court, however, will have a much wider scope of review of a bench trial.

2. A bench trial eliminates the risk of a runaway jury awarding obscenely high damages.

Before asking your employees to sign that arbitration agreement, consider whether there are other viable alternatives to reach the same goal, such as a jury trial waiver.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Some alternatives to arbitration of employment claims

Last week, the U.S. Supreme Court decided Hall Street v. Mattel, which held that the Federal Arbitration Act is the exclusive grounds for vacating or modifying an arbitration award, and that parties may not contractually agree to expanded grounds of judicial review. Briefly, the parties had entered into an agreement in which they agreed to the de novo review of the arbitration decision of their environmental dispute. The Supreme Court held that such provision was not valid under the FAA. Thus, a court can only overturn an arbitrator's decision are where: (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality and/or corruption; (3) the arbitrators were guilty of other misconduct; or (4) the arbitrators exceeded their powers.

While arbitration continues to the favored method used by employers to limit their potential exposure in front of a jury, let me discuss two other possible alternatives.

Contractual Waivers of Jury Trials

First, employers can have employees sign agreements waiving the right to ask for a jury in any subsequent legal disputes. More than 20 years ago, in K.M.C. Co. v. Irving Trust Co., the 6th Circuit stated: "It is clear that the parties to a contract may by prior written agreement waive the right to jury trial.... [T]he constitutional right to jury trial may only be waived if done knowingly, voluntarily and intentionally." The contract should clearly and unambiguously advise the employee that by signing the agreement the employee is giving up any and all rights to have any claims related to his or her employment raised by a jury. The more broadly the waiver is drafted, the more likely it will cover an employment-related claim, provided it is otherwise knowing and voluntary.

In light of Hall Street v. Mattel, jury trial waivers have one key advantage over more traditional arbitration agreements -- you are not giving up any appeal rights, and an appellate court's review of a bench trial will be much wider than a court's review of an arbitration award. Of course, this factor cuts both ways. At the same time, though, a bench trial eliminates the risk of a runaway jury awarding obscenely high damages, so it may be a more simply and preferable option to a traditional arbitration agreement.

Agreements to Shorten the Statute of Limitations

Secondly, employers can attempt to limit the amount of time employees have to assert employment claims. In Thurman v. DaimlerChrysler, Inc., the 6th Circuit held that a clause in an employment application limiting the statutory limitations period for filing a lawsuit against the employer was valid. Thurman's employment application with DaimlerChrysler contained a clause waiving any statute of limitation and agreeing to an abbreviated limitations period in which to file suit against the employer. Specifically, the clause stated:

READ CAREFULLY BEFORE SIGNING I agree that any claim or lawsuit relating to my service with Chrysler Corporation or any of its subsidiaries must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.

The Court held that the abbreviated limitations period contained in the employment application was reasonable, and that all of Thurman's claims against DaimlerChrysler were time barred by the six-month limitations period. The Court paid particular attention to the "read carefully before signing" language, and noted that it was in bold and placed conspicuously directly above Thurman’s signature acknowledging that she read and understood the document. It also found the specific language used was clear and unambiguous.

The advantage of using these types of clauses is that you can limit the duration of potential liabilities. For example, in Ohio employees have 6 years to file discrimination claims (other than age) under R.C. 4112.99. A clause such as the one in Thurman would shorten that time frame from 6 years to 6 months, a dramatic improvement.

I normally don't put disclaimers directly in my posts. But, these ideas are merely something to think about for your business. Please do not try this at home. For example, although not raised in the Thurman case, statute of limitations waivers should not seek to limit the statutory window for filing charges with administrative agencies because of the potential for a retaliation claim. Talk to a lawyer before implementing either of these options.

Mmmmmmmm, arbitration clauses

Arbitration clauses and their enforceability is not the most scintillating topic in the annals of employment law. So, I took some (but not much) notice of today’s 6th Circuit decision in Seawright v. American General Financial Services, in which the Court upheld an arbitration clause contained in an employment policy over the employee’s objection that she had never assented to be bound by its terms as she never signed any acknowledgment of the policy. The majority found that Seawright’s mere continued employment after receiving the policy constituted valid assent. Because she continued working and never objected to the arbitration clause, she was bound by it.

The dissent, clearly troubled by the notion using the failure to express a lack of assent as evidence of assent, illustrates its point by quoting one of the great thinkers of the late twentieth and early twenty-first centuries, Homer Simpson:

Homer Simpson talking to God: “Here’s the deal: you freeze everything as it is, and I won’t ask for anything more. If that is OK, please give me absolutely no sign. [no response] OK, deal. In gratitude, I present you this offering of cookies and milk. If you want me to eat them for you, please give me no sign. [no response] Thy will be done.” The Simpsons: And Maggie Makes Three (Fox television broadcast, Jan. 22, 1995).

Who says cartoons rot your brain?

Arbitration Fairness Act would ban mandatory ADR of employment disputes

Mandatory arbitration agreements have long been favored as a tool by employers to limit the risks associated with jury trials. If the Democrats have their way, however, that tool may soon no longer be available. The Arbitration Fairness Act is currently pending in both the House and the Senate. These bills would amend the Federal Arbitration Act to render invalid and unenforceable pre-dispute arbitration agreements that require arbitration of employment disputes. Such disputes could only be arbitrated if the employer and employee agree to submit to arbitration after the dispute arises. The law's purpose is to prevent those with less bargaining power, such as employees, from being forced to arbitrate and give up their right to a jury trial. If this bill becomes law (which is doubtful as long as there is a Republican in the White House), arbitrations of employment disputes will all but disappear. It is hard to imagine a situation where a plaintiff would agree to give up a jury trial to have a dispute decided by a panel of arbitrators. If you currently use or would like to use arbitration as a means to resolve claims by your employees, you should write your Congressperson and Senator and urge opposition of these bills.