Employer’s Failure to Compel Arbitration Shows the Tricky Balance Employers Face when Implementing New Mandatory Arbitration Programs
By: Jack Blum
Employers may choose to implement arbitration programs to manage the costs and risks of employment-related litigation. Arbitration may minimize negative publicity, and may further assist employers to keep costs low and reduce the availability of class or collective actions.
A recent District of Columbia federal court decision shows how implementing a workplace arbitration program can be tricky. In Jin v. Parsons Corp., 2019 WL 356902 (D.D.C. Jan. 29, 2019), the employer instituted a mandatory arbitration program, and e-mailed all of its employees to ask them to acknowledge receiving the arbitration agreement. The e-mail stated that if the employee did not sign the agreement, continuing employment with the employer would constitute acceptance of the arbitration agreement’s terms. The employer sent the plaintiff employee this e-mail and three follow-up reminders, but he never responded. Thereafter, the employee sued the employer, alleging age discrimination, and claimed he had never read the e-mails or agreed to arbitrate his claims.
The court refused to send the case to arbitration, finding that while a signed arbitration agreement is not necessarily required, the employer needed to offer some evidence that the employee had agreed to arbitrate his claims. Mere continuing employment was not sufficient evidence of such an agreement where the employer could not prove that the employee knew that his agreement to arbitrate was a condition of employment. In that situation, the court reasoned, the employee’s failure to dispute the agreement to arbitrate could be explained by his testimony that he did not know that such an agreement even existed.
The Jin case highlights some of the challenges employers face when implementing arbitration programs. The employer tried to implement its program by sending an e-mail and claiming that lack of action would constitute an agreement to arbitrate any claims against the employer. However, avoiding confronting the employee about his failure to sign the arbitration agreement left the employer without the evidence of consent it needed to enforce the agreement.
Implementing a workplace arbitration program can be tricky to get right. Employers with questions regarding arbitration policies – and the risks and benefits associated therewith – would do well to consult with competent counsel.