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Jay Leskera

Employees Must Avoid Arbitration Agreements

An Arbitration Agreement is a document usually presented to a newly hired employee as part of the onboarding process.  In essence, the Arbitration Agreement provides that the employer and employee agree to have any dispute between them decided by an arbitrator rather than a judge and jury.  The employer fares much better in an arbitration setting than in a court of law in my experience.  Therefore, the employee is better to opt-out of an Arbitration Agreement and let our local judges and juries decide their case.

An Arbitration Agreement presented by an Illinois employer is subject to Illinois law concerning the formation of a legal contract.  In Illinois, an offer, an acceptance, and consideration are the basic ingredients of a contract.  Melena v. Anheuser-Busch, Inc., 847 N.E.2d 99, 109 (Ill. 2006).  The party seeking to compel arbitration, which is usually the employer, has the burden to establish that the parties have a valid agreement to arbitrate. Hubbert v. Dell Corp., 835 N.E.2d 113, 121 (5th Dist. 2005). 

In Melena, theplaintiff worked at the Anheuser-Busch distribution center in Mt. Vernon.  Anheuser-Busch introduced a Dispute Resolution Program which included an arbitration agreement. Melena, 847 N.E.2d at 101.  Anheuser-Busch sent a letter to all Mt. Vernon employees, including the plaintiff, announcing the implementation of the program and materials including the agreement to arbitrate and specifying that the arbitration decision was binding. Melena, 847 N.E.2d at 101.  The materials also covered the arbitration procedure and advised employees that continuing employment would constitute agreement “to submit all covered claims to the dispute resolution program.” Melena, 847 N.E.2d at 101.

In addition to the letter with written materials, Anheuser-Busch held a presentation for all employees including the plaintiff at the Mt. Vernon distribution center. Melena, 847 N.E.2d at 102.  The presentation included an explanation of the arbitration agreement and was followed with a question-and-answer session for employees attending the presentation.  Furthermore, Anheuser-Busch placed numerous posters explaining the arbitration agreement throughout the Mt. Vernon distribution center. Melena, 847 N.E.2d at 102.  Anheuser-Busch also prepared and distributed to employees a Distribution Center Handbook which contained a description of the dispute resolution program including the arbitration agreement. Melena, 847 N.E.2d at 102.  The plaintiff signed an Employee Acknowledgement and Understanding confirming her awareness and agreement to follow the matters set forth in the Handbook including the binding arbitration agreement.  Melena, 847 N.E.2d at 102.

The Illinois Supreme Court applied state contract law and determined that the arbitration agreement constituted an enforceable contract. Melena, 847 N.E.2d at 109.  In determining that Anheuser-Busch made an “offer” to the plaintiff to enter into the arbitration agreement, the Court stated: “We believe that Anheuser-Busch’s introduction of the Dispute Resolution Program, its mailing of materials related to the program to its employees, constitutes Anheuser-Busch’s ‘offer.’” Melena, 847 N.E.2d at 109.  The Court further found that the plaintiff’s continued employment constituted both acceptance and consideration. Melena, 847 N.E.2d at 109. The Court concluded: “Under these facts, the agreement to arbitrate covered claims arising from the employment relationship is enforceable.” Melena, 847 N.E.2d at 102.

The Court’s decision in Melena was based in part on its decision 19 years earlier in Duldulao v. Saint Mary of Nazareth Hospital Center, 505 N.E.2d 314 (Ill. 1987).  In Duldulao, the issue before the Court was whether an employee handbook’s discipline policy constituted an enforceable contract. Duldulao, 505 N.E.2d at 315.  The Court held that a handbook or policy statement creates an enforceable contract where:

  1. The language of the policy statement contains a promise clear enough that an employee would reasonably believe that an offer has been made;
  2. The statement must be disseminated to the employee in such a manner that the employee is aware of its contents and reasonably believes it to be an offer; and
  3. The employee must accept the offer by commencing or continuing to work after learning of the policy statement.

Duldulao, 505 N.E.2d at 318.

The Court found that the handbook had been properly disseminated to the Plaintiff and that she was aware of its contents.  Duldulao, 505 N.E.2d at 319.  The Court noted that the Defendant “gave the handbook to the Plaintiff and intended that the Plaintiff become familiar with its contents.” Duldulao, 505 N.E.2d at 319.  The Court further stated that part of the Plaintiff’s duties included instructing new employees on the contents of the handbook. Duldulao, 505 N.E.2d at 319.  The Court found: “There is no question but that Plaintiff continued to work with knowledge of the handbook provisions.” Duldulao, 505 N.E.2d at 318.  The Court concluded: “Under these circumstances the handbook’s provisions became binding on the employer.” Duldulao, 505 N.E.2d at 319.

Therefore, it is possible to avoid the Arbitration Agreement by showing it was not properly disseminated to the employee and therefore not a valid contract in Illinois.  Or that the Arbitration Agreement was produced by fraud, duress, or it was unconscionable.  It is much easier, however, if the employee selects the opt-out provision of the employment agreement if given the opportunity.  Read the onboarding documents carefully and be weary as employers often try to bury them in a stack of documents that will have your head swimming.  Better yet, call the Leskera Law Firm for a free consultation on any employment issue.

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