Wednesday, August 31, 2011

6th Circuit: Arbitration Clause in Employee Policy Not Enough

Gavel The Sixth Circuit issued an important arbitration opinion yesterday in Hergenreder v. Bickford Senior Living Group, LLC. The plaintiff in the case was a registered nurse, who shortly after being hired, had to take a leave of absence for cancer treatment, and was subsequently fired because of that leave. Hergenreder wanted to sue Bickford under the ADA, but Bickford asserted that she had to arbitrate her claim, and the district court agreed. The Sixth Circuit disagreed and so reversed and remanded the case to proceed.

The arbitration clause was contained in a dispute resolution policy. That policy was not itself contained in the employee handbook. Instead, in one brief sentence, the employee handbook stated that there was a dispute resolution policy and that employees should look at it for the details. Hergenreder signed a form stating that she had read and understood that handbook, but the Sixth Circuit ruled that there was not sufficient evidence that Hergenreder had been informed of the arbitration policy and actually agreed to be bound by it. The employee handbook itself never mentioned arbitration, and although the policy statement the handbook referred to had an explicit arbitration clause, and did state that agreeing to the arbitration clause was a condition of employment, there was no separate acknowledgement by Hergenreder that she had been notified of the contents of the dispute resolution policy. The oblique reference in the employee handbook was not enough to constitute an offer under state contract law.

It also seems to have helped that Bickford's employment handbook was carefully worded, as many are, to make clear to employees that the policies it contained were not binding on it. To drive that point home, the handbook stated "“[t]his handbook is intended as a summary only and is not a contract between Bickford Cottage and its employees." It further provided, in a separate section,

This handbook has been provided to you for the purpose of acquainting you with the personnel policies and procedures, responsibilities of Bickford Cottage. It does not constitute a contract of employment in whole or in part. Bickford Cottage may add to, change or delete any of the contents at any time with no notice.

This is an important lesson for employers, I think, on information management and clarity of communications. On the one hand employers don't want to be bound by most things that are put into employee handbooks, but use those as a way to let employees know what is expected of them to up front, which is a good business practice to create a sort of due process of the workplace. That kind of informal due process tends to make employees more comfortable, both because they feel like they know what to expect, and because they have at least an impression that the employer will act fairnly and consistently. Employers want to be able to be flexible, though, to address situations they hadn't envisioned or to change with changing circumstances.

On the other hand, employers do want employees to be bound to arbitration agreements. To be sure that they have created a contract for that, employers have to be careful about the amount of information they give employees at one time, and the manner in which that information is delivered. Having a separate arbitration policy made sense here, and this employer even had a form that employees were to sign, acknowledging knowledge of the policy (and presumably acceptance by accepting employment). The problem was that Bickford could not show that Hergenreder had actually received a copy of that policy or that she had signed any acknowledgement form. No actual knowledge here, no offer and acceptance, and no contract.


Arbitration, Employment Common Law | Permalink

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