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Employee's Conduct Was Deemed Acceptance Of Agreement To Arbitrate Employment Claims

Nov 11, 2013

By: Jennifer M. Buckley

Employers may be able to obtain an enforceable agreement to arbitrate employment claims without tracking down employee acknowledgments of receipt and agreements to comply. In a recent decision by the Sixth Circuit Court of Appeals, the court determined that Macy's arbitration procedure for employment related claims was a binding and enforceable agreement under Michigan law, notwithstanding the fact that the employee did not sign a written agreement agreeing to arbitration. Tillman v. Macy's, Inc. , (Case No. 11-2580 6th Cir. 2013)  Most employers ask employees to acknowledge receipt in writing and agree to the terms of an arbitration agreement.  Today, some employers, in the hope of simplifying matters, obtain the employee's signature and agreement via an electronic signature.  The recent Tillman decision may give employers another option to consider.

In Tillman , the employee filed a race discrimination claim in court following her termination of employment.  Macy's filed a motion to compel arbitration, stating that Tillman had agreed to and was bound by its Solutions InStore program.  Tillman had been a May Department Stores employee when Macy's purchased it and became the new employer.  At that time it rolled out its Solutions InStore program to former May employees.  Macy's mailed a packet to Tillman's home that notified her of the program.  It included a brochure and an opt-out card which stated that she was automatically covered, unless she opted out. The form directed her to opt out by a particular date.  Tillman claimed that she did not get the packet despite Macy's proof of mailing.  The Court determined that the packet was received, following the long held rule of law that items properly addressed and mailed are presumed received.

Perhaps a factor the Court considered in addition to the mailed packet was Tillman's admission that she attended a mandatory video training regarding the program, signing an attendance sheet that she was there.  She admitted that she received a brochure about the program at that meeting.

The Court analyzed whether a contract had been formed and determined that it had: Tillman was notified that arbitration was an optional part of the Step 4 program, she was given brochures that described the program in detail and further, she was given training.  She was notified that she was automatically covered unless she opted out by returning an opt out form to her employer.  The Court concluded that she was clearly given notice of what the offer was and it further decided that she accepted the offer by her conduct, i.e., continuing her employment without opting out of the program.

In addition to the review of traditional contract principles under Michigan law, the Court considered whether Tillman had properly waived her rights under civil rights laws, such as the right to a jury trial.  To have such a waiver, courts consider various factors including whether it was knowing and voluntary, whether the waiver was clear, whether the person had time to consider the agreement and consult with an attorney.  In the Tillman case, the court determined that it was knowing and voluntary as Tillman had the agreement for two months before it became effective and she was also given a full year to opt out.

The Macy's program is somewhat unique, but also more typical of large nationwide employers.  The decision is one that supports arbitration of disputes, including civil rights claims.  It provides alternatives to obtaining the employee's agreement with a written signature.  However, as can be seen from the facts, Macy's spent substantial time and effort notifying employees of the program and providing training and opportunities to opt out of it.  The bottom line is that employers who desire arbitration of disputes rather than litigation must take steps to ensure that there is an agreement and that there is a voluntary and knowing waiver of civil rights.  It also must be certain that the arbitration decision is enforceable  under the law which requires a consideration of both common law and/or applicable statutes, such as the federal arbitration act or Michigan's recently revised arbitration act,  to enforce such agreements.  How a binding agreement is accomplished from a business standpoint should be reviewed by legal counsel as the law provides several options with varying degrees of risk.

If you have any questions about the arbitration agreements or waiver of civil rights claims, you may contact Jennifer M. Buckley, (213) 965-8371, jbuckley@clarkhill.com or another member of Clark Hill's or Thorp Reed Clark Hill's Labor and Employment Groups