So You Agree? – NJ Supreme Court Finds Assent To Arbitration Agreement By Employee’s Continued Employment

Seyfarth Shaw LLP

Seyfarth Synopsis:  In Skuse v. Pfizer, Inc., the New Jersey Supreme Court held that an employee’s continued employment can be deemed to be assent to the terms of an employer’s arbitration agreement.

On August 18, 2020, the New Jersey Supreme Court issued an opinion in Skuse v. Pfizer, Inc. reversing the Appellate Division and enforcing the company’s Mutual Arbitration and Class Waiver Agreement (the “Agreement”).  The Court analyzed whether there was (1) a provision that plainly alerted the employees that they are giving up the right to litigate in court and (2)  clear and unmistakable proof that they agreed to the provision.  Ultimately, the Court found that the emails and “training” modules sufficiently informed the employees of their waiver-of-rights and, further, prescribed the specific method by which an employee would assent to the Agreement—in this case, continued employment for sixty days after receipt of the Agreement.  The plaintiff had remained employed for more than sixty days and, therefore, was deemed to have accepted the Agreement.

By distinguishing its prior decisions and enforcing the Agreement, the Court provided much-needed clarity on an issue that has been developing over the years: when does an employee’s action or inaction, rather than signature, constitute assent to an agreement?  The decision provides helpful guidelines for crafting and delivering enforceable arbitration agreements.

The NJ Supreme Court’s Decision

In 2016, the company’s human resources department sent to its employees, including the plaintiff, an email announcing its then-new Mutual Arbitration and Class Waiver Agreement along with a link to the actual document.  Importantly, the Agreement stated that the employee would be deemed to have accepted it if he or she continued working at the company for sixty days.  The email also included a link to “Frequently Asked Questions,” which reiterated the employee’s assent by continued employment and encouraged any employee who had “legal questions” about the Agreement “to speak to [his or her] own attorney.”  Employees also received emails that assigned a “training module” about the Agreement, which consisted of four slides: (1) stating that the Agreement was a condition of employment; (2) containing instructions for opening the Agreement; (3) containing language informing the employee of the method of acceptance and a box stating “CLICK HERE to acknowledge”; and (4) thanking the employee for reviewing the Agreement and providing an email for questions.

Plaintiff remained employed for several months after these emails and training modules were circulated.  After her employment was terminated in August 2017, she filed a complaint alleging discrimination.  The company moved to compel arbitration pursuant to the Agreement.

At first, the trial court dismissed the complaint and directed her to proceed to arbitration, as provided in the Agreement.  On appeal, however, the Appellate Division reversed.  The Appellate Division cited three reasons for its decision: (1) the Agreement was sent via email and employees are inundated with emails; (2) it was explained in a “training module”; and (3) the instruction was given to “acknowledge” her obligation to assent to the Agreement if she remained employed for sixty days, rather than a box to “agree” to the Agreement.

The NJ Supreme Court reversed the Appellate Division.  While the Court commented that term “training module” was a misnomer, the totality of the company’s communications made unmistakably clear (1) the employee’s waiver-of-rights and (2) the method to express her assent to the Agreement.  That being said, Justice Albin issued a concurrence that tees-up potential issues in the future and Chief Justice Rabner issued a dissent that outlines arguments on the other end.

Considerations Looking Forward

As we have previously posted here and here, in 2019 New Jersey passed legislation aimed at limiting the use of arbitration agreements by employers by deeming prospective waivers of rights (i.e., arbitration agreements) to be against public policy and unenforceable to the extent that they pertain to claims of discrimination, harassment, or retaliation under the New Jersey Law Against Discrimination.  Beyond the fact that the law may be preempted by the Federal Arbitration Act, outside of those delineated circumstances, arbitration agreements and policies remain potentially enforceable in New Jersey as to other types of disputes.

The Court’s analysis of the terms in the Agreement and the company’s communications about the Agreement provide helpful guidelines as to when an employee’s continued employment constitutes assent.  The Court relied on the totality of the Agreement, the company’s emails, the “FAQs” document, and the training modules to find that the company had sufficiently informed the employees of their waiver-of-rights and explained that remaining employed for sixty days would constitute assent.  The following factors informed the Court’s decision and, going forward, should be considered by any company seeking to implement an arbitration policy in New Jersey:

  • Bold, Clear Language In the Agreement: The Agreement stated in bold font and clear language that the employee would be deemed to have accepted the Agreement by remaining employed.
  • Emails & Documents Supporting the Agreement: The company sent emails and FAQs clearly stating “[t]he [a]rbitration [a]greement is a condition of continued employment with the Company. If you begin or continue working for the Company sixty (60) days after receipt of this Agreement, it will be a contractual agreement that binds both you and the Company.” The emails, FAQs, and Training Slides all provided a consistent message.
  • Clear Explanation of Waiver-of-Rights & Arbitration: The Court credited the company’s communications for explaining “in general terms what arbitration … would entail” and unambiguously stated that claims would be resolved by arbitration, not “by a court or jury.”
  • Email Is an Acceptable Method of Delivery: While the Court agreed that many office workers are “inundated” with emails, “no principle of New Jersey contract law bars enforcement of a contract because that contract is communicated by e-mail, rather than by the transfer of a hard-copy document.” Even though the Court noted the “large volumes of e-mails in the workplace,” it emphasized that  the company did not try to hide the arbitration agreement in any way and went to great lengths to clearly communicate the terms of the Agreement.
  • Don’t Label Communications About Arbitration as “Training”: The Court noted that it was a misnomer to characterize the slides on the Agreement as “training.” When an employer disseminates an arbitration agreement, it can use tools developed for its training program, such as email notice to employees, mandatory review of an agreement along with other relevant documents, and digital confirmation that the employee has reviewed the materials, but those communications should not be labeled “training.”
  • The Term “Acknowledge” Can Constitute Acceptance, But “Agree” May Be Better: The Court held that the “CLICK HERE to acknowledge” box at the end of the training was sufficient in this case, distinguishing past precedent in Leodori. In Leodori, an employee was given an Employee Handbook containing an arbitration agreement, along with two separate forms to “acknowledge” receipt and an “agreement” form to accept the agreement.  The plaintiff only signed the “acknowledgement” form, not the “agreement” form, so the court declined to enforce arbitration.  The Skuse Court found distinguishable facts here, noting that the company’s communications to the plaintiff prescribed the specific method of expressing assent to the agreement: her continued employment for an additional sixty days.  Immediately above the “CLICK HERE” button, the company reiterated that continued employment would be deemed acceptance.  While the Court found that these communications made the “acknowledgement” sufficient in this instance, it would be easier to enforce an agreement that used terms such as “agree.”

The Skuse decision is another installment in the ever-evolving body of law related to arbitration agreements in the employment context.  Arbitration policies continue to offer an attractive and streamlined alternative for employers to resolve disputes, especially in states like New Jersey where courts have ever-increasing caseloads.  The Skuse decision offers employers practical guidance that is likely to assist companies seeking to implement an enforceable arbitration policy in the State of New Jersey.

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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