Employee Bound to Arbitrate Claims Against Employer Based Upon Language in Employee Handbook

May 15, 2014

In a recent ruling from a federal district court in Massachusetts, the court held that the terms regarding an arbitration program contained in an employee handbook operated as a binding agreement to arbitrate the employee's discrimination claims against the employer.

In Daniels v. Raymours Furniture Co., Inc., the plaintiff had been an employee of the defendant-employer. When he was hired, the plaintiff was required to review and acknowledge receipt of the employer's employee handbook containing the company's employment policies. A few months later, the employer adopted an arbitration program, and incorporated the terms of that program into the employee handbook. The employer emailed the revised handbook to all employees, including the plaintiff. Specifically, the new terms specified that the program was an essential element of the employees' continued relationship with the employer, and that accepting the new program was a condition of employment. The plaintiff reviewed the handbook on his computer, and clicked "done" to certify that he had read the updated policy.

The plaintiff later brought claims relating to employment discrimination against the employer, alleging that the employer violated the American Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), and M.G.L. c. 151B, the Massachusetts statute that makes it unlawful for employers to discriminate against employees. The employer, however, argued that the plaintiff was barred from litigating those claims based upon the new arbitration language in the company's employee handbook, and requested that the court dismiss the action and order the parties to arbitrate the matter.

The employer argued that the plaintiff's acceptance of the employee handbook terms constituted a valid contract to arbitrate claims against the employer; that it was entitled to invoke the arbitration language; that the plaintiff was bound by the arbitration language; and that the plaintiff's claims against the employer fell within the scope of the arbitration clause. The district court agreed.

The court held that a reasonable employee would have believed that the employer was offering to continue his employment on the terms of the updated handbook, including the new arbitration program, as the handbook set forth rights and obligations that were binding on both parties. Under Massachusetts law, continued employment can be valid consideration for signing the handbook and agreeing to arbitrate. Moreover, the court found that the employer consistently emphasized to employees the importance of the handbook, and required employees to review and certify that they had read it.

Under these circumstances, the court found the revised employee handbook to be a valid contract, containing a binding arbitration clause. Accordingly, the employee was bound to arbitrate his discrimination claims, and his litigation case was dismissed.