NJ Court Upholds Electronic Employee Arbitration Agreement

Recent Appellate Decision Highlights That New Jersey Employers May Use An Electronic Employee Arbitration Agreement

The Appellate Division recently upheld an electronic employee arbitration agreement, the full text of which was incorporated by a hyperlink. The decision highlights that New Jersey employers may use an electronic employee arbitration agreement that contains hyperlinks to the full policy, so long as the page signed by the employee clearly obtains the worker’s consent and references that the policy is more fully described in another document.

Electronic Employment Agreements

Plaintiff Alex Russo started working for J.C. Penney Corporation, Inc. (J.C. Penney) in 2014. On her first day of work, plaintiff went through an “onboarding process.” It required a computer with access to J.C. Penney’s intranet and included: confirmation of the employment offer; completion of various forms; execution of J.C. Penney’s Binding Arbitration Agreement (Agreement); and review of the corporate attendance policy and dress code.

New employees are given the one-page Agreement to review online. The Agreement included a description of the rules governing arbitration of employment disputes (Rules), a link to the full text of the Rules, and a signature box. To access the full text of the Rules, the Agreement stated: “Click on the link below to read the JC Penney Rules of Employment Arbitration. The [R]ules will open in a separate browser window. After you have finished reading the Rules, close the other browser window to return to this form.”

The Rules identified claims subject to binding arbitration, including discrimination, retaliation, wrongful termination, and breach of common law obligations or duties. Below the link to the Rules, the Agreement specified that the employee and JCPenney “voluntarily agree to resolve disputes arising from, related to, or asserted after the termination of . . . employment through mandatory binding arbitration under the J.C. Penney Rules of Employment Arbitration.” By signing the Agreement, the employee acknowledged that she was given the opportunity to review the Rules and consult with an attorney, and agreed to be bound by the document and the Rules even if she did not review the Rules or consult with an attorney. The employee was required to sign the Agreement electronically in order to complete the onboarding process.

Eight months after she was hired, J.C. Penney terminated Russo. One year later, she filed a complaint alleging defendants violated the New Jersey Law Against Discrimination (LAD) and the New Jersey Conscientious Employee Protection Act (CEPA), engaged in a civil conspiracy, and discriminated against her because she had young children. J.C. Penney filed a motion to dismiss the complaint and compel binding arbitration in accordance with the Agreement. In response, Russo contended that if she signed the document, she did so without realizing she was signing the Agreement.

Appellate Division Enforces Arbitration Agreement

The Appellate Division concluded that the employment agreement was enforceable. In reaching its decision, the court highlighted that the page on which an employee acknowledges and assents to an arbitration agreement “need not recite [the full] policy verbatim so long as the form refers specifically to arbitration in a manner indicating an employee’s assent, and the policy is described more fully in an accompanying handbook or in another document known to the employee.”

With regard to J.C. Penny’s arbitration agreement, the Appellate Division concluded that Russo was provided with sufficient notice of the arbitration rules. “In this case, the agreement plainly stated that plaintiff was agreeing ‘to resolve disputes arising from, related to, or asserted after the termination of [her] employment through mandatory binding arbitration under the J.C. Penney Rules of Employment Arbitration’ and ‘waiv[ing] the right to resolve these disputes in courts.’ Because the rules were provided to plaintiff, the agreement is valid and enforceable,” the court explained in a per curium opinion.

The court further held that the arbitration agreement was enforceable even if the specific rules were only referenced in the agreement. “We disagree with the motion judge’s legal conclusion that the agreement was invalid because the list of claims subject to binding arbitration was not included on the face of the one-page agreement,” the court stated. “We find that the claims subject to binding arbitration were described fully in the hyperlink to the agreement and that plaintiff expressly acknowledged she had an opportunity to review the entire agreement, including the rules.”

If you have any questions or if you would like to discuss the matter further, please contact me, Joel Kreizman, at 201-806-3364.