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USA: Court rules arbitration agreements should be separate from Employee Handbooks

Author: Dina Mastellone, Genova Burns LLC, & Amanda Frankel on JD Supra (USA), Published on: 3 February 2016

“NJ Employers May Need to Revisit Arbitration Clauses Following Appellate Division Ruling”, 27 Jan 2016

On January 7, 2016, the New Jersey Appellate Division found that an arbitration provision contained in an Employee Handbook was unenforceable…In Morgan v. Raymours Furniture Company, Inc. et al., plaintiff-employee alleged that in response to a complaint of age discrimination, he was given an ultimatum by the defendant-company, sign an arbitration agreement or be terminated.  Plaintiff-employee refused to sign the arbitration agreement and was subsequently terminated.  Plaintiff-employee sued alleging violation of the New Jersey Law Against Discrimination (“LAD”), wrongful termination, and other similar claims…[T]he Appellate Division affirmed…that despite plaintiff-employee  acknowledging receipt of the Employee Handbook and the Employee Arbitration Program contained in the Handbook…the acknowledgements only signify that the employee received a copy of the Employee Handbook, not that he or she necessarily read and/or understood the contents…This decision makes clear that a court will not enforce an arbitration provision when the Employee Handbook includes an at-will disclaimer.  Given this decision, employers should carefully check their Employee Handbook to ensure that arbitration agreements are not contained therein. Employers who seek to arbitrate claims and disputes with their employees arising from employment must utilize a separate, stand-alone arbitration agreement which employee’s must separately sign and acknowledge receipt.

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