Do You Require Your Employees to Electronically Acknowledge Arbitration Agreements? Make Sure Your Process Is Effective.
It should go without saying that, when an employer presents
an employee with an arbitration agreement, it is not enough for the employee to
sign the document simply, “I’ve reviewed the agreement.” An employee must
affirmatively agree to or, in legal terms, accept the contract.
The same is true for agreements presented to employees
electronically. Reminding employers of this, the Eighth Circuit Court of
Appeals (which governs Arkansas, Iowa, Minnesota, Missouri, Nebraska, North
Dakota, and South Dakota) last month affirmed a district court’s refusal to
compel arbitration where the employer could, at best, show that the employee
acknowledged her review of the arbitration programs (and possibly not even that
much) — but did not
actually agree to arbitration. See
Shockley v. PrimeLending, No. 18-1235 (8th Cir. July 15, 2019).
In that case, the employer maintained its employee handbook,
which contained a dispute resolution/arbitration provision, on a network
accessible by its employees. When an employee clicked on the Handbook, the
system automatically generated an acknowledgment of review, advising the
employee that by entering the system, she acknowledged her review of the
material. It also generated a pop-up window with a link to open the full text
of the handbook. It did not record whether the employee clicked on the
hyperlink, or require the employee to affirmatively agree to the arbitration
provision. The employer required its employees to review the handbook annually
and presented evidence that the plaintiff twice entered the system, thus
generating the automatic acknowledgment.
The court held that the employer’s process stopped short of
what was required to demonstrate a valid contract. Its software did not require
employees to actually click the link to open the handbook, much less the
specific arbitration policy, or record when they did. Its policy did not advise
employees that their continued employment would constitute acceptance of the
arbitration provision. And the employer did not require the employee to
affirmatively “accept” or “agree” to the
Luckily, this case result can be explained by the employer’s
misstep. There are any number of recent cases in which courts compelled arbitration
based on employees’ electronic agreements to arbitrate. Typically, after being
advised by the employer that they must review and agree to the arbitration
agreement (often as a condition of continuing employment), the employee inputs
his or her unique login identification and password into the employer’s
intranet, clicks on the link to review the arbitration agreement, then
indicates (through electronic signature, check box or otherwise) their
agreement to arbitrate. The employer’s system captures the date and time that
the employee reviewed the policy and signed the agreement. (Most states also
allow acceptance by continued employment — as long as the employer can prove that the employee
had adequate notice; capturing evidence of an employee’s electronic review is
essential to showing that notice if an employer plans to rely on acceptance by
The bottom line: after expending resources to prepare a
sound arbitration agreement, employers should make sure their implementation
process results in an enforceable contract.
Subscribe to Managing the Modern Workplace to receive weekly email updates.