The Consentability of Mandatory Employment Arbitration Clauses

Deborah Zalesne recently posted an article on “The Consentability of Mandatory Employment Arbitration Clauses” on SSRN  Her article was part of the Loyola Law Review symposium issue on consentability.  (The symposium issue is available on Westlaw but it is not yet up on the Loyola Law Review website).  Zalesne applies my consentability framework to mandatory arbitration clauses in employment contracts and argues that consent conditions are usually insufficiently robust given the  necessity of employment and the way the terms are presented, among other factors.  Zalesne proposes that there should be a rebuttable presumption of no consent to such clauses but that the presumption may be rebutted by evidence of negotiation by parties with roughly equal bargaining power.

Zalesne’s article is especially relevant and timely given the recent case decided by the New Jersey Supreme Court in Skuse v. Pfizer, Inc.  In that case, decided last month, the employer, Pfizer, emailed its employees a link to a five-page “Mutual Arbitration and Class Waiver Agreement,” which contained the following language in bold on the final page of the Agreement:

You understand that your acknowledgement of this Agreement is not required for the Agreement to be enforced. If you begin or continue working for the Company sixty (60) days after receipt of this Agreement, even without acknowledging this Agreement, this Agreement will be effective, and you will be deemed to have consented to, ratified and accepted this Agreement through your acceptance of and/or continued employment with the Company.

The e-mail also included a link to “Frequently Asked Questions,” including “Do I have to agree to this?” to which the response indicated, “The Arbitration Agreement 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.”  Subsequent emails and a required training module noted that agreement to individual arbitration was a condition of employment and required clicking on a box to acknowledge assent to the Arbitration Agreement as a condition of employment.

Pfizer terminated Skuse’s employment and Skuse sued, claiming that they wrongfully terminated her because of her religious objection to being vaccinated for yellow fever.  Pfizer moved to compel arbitration. 

The majority of the court found that, considering all the methods together, Pfizer’s Agreement “clearly informed” Skuse that by continuing to be employed for sixty days, she would waive her right to pursue employment discrimination claims in court.  The concurrence and the dissent raised warning signs, however, about arbitration clauses in employment contracts.  The concurring opinion expressed “displeasure” at the “online waiver-of-rights” procedure and warned of the day when “every employment and consumer contract” contains an arbitration clause.  The dissent objected to the use of the word “acknowledge” instead of “agree,” arguing that they mean two different things.

The case underscores many of the issues raised and discussed in Zalesne’s article regarding what it means to consent to a waiver of rights in the context of employment.