Employer’s Handbook Disclaimer Renders Agreement To Arbitrate Unenforceable, New Jersey District Court Holds

Employee handbooks typically contain an overview of company history, a set of employment policies and general guidance, and a clear and prominent disclaimer that nothing in the handbook creates a contract of employment between the company and its employees. The Raymours Furniture Company handbook went one step further—it also contained a mandatory arbitration agreement, which purported to require employees to arbitrate any and all employment related claims against the company. Raymours Furniture Company, Inc. v. Rossi, Civ. No. 13-4440 (D.N.J., Jan. 2, 2014). After an employee sent a demand letter to Raymours asserting various claims of discrimination, the company moved to compel arbitration pursuant to the handbook’s arbitration agreement. The court ruled against the company, finding that the arbitration agreement was unenforceable. It noted that the clear disclaimer on the handbook’s first page, which began: “THIS HANDBOOK IS NOT A CONTRACT OF EMPLOYMENT,” did not expressly exempt the arbitration policy. As such, the handbook did not clearly and unambiguously confirm the employee’s agreement to arbitrate. Moreover, Raymours’ reservation of its right to change the contents of the handbook at any time without notice rendered the arbitration provision illusory and unenforceable.

Note: This article was published in the March 2014 issue of the New Jersey eAuthority.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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