NJ Appeals Court: Continued Employment Created Arbitration Consent

A New Jersey appeals court recently held that three former employees of Ernst & Young assented to arbitration by continuing their employment after the company amended its employee policy governing alternative dispute resolution (ADR).

A New Jersey appeals court recently held that three former employees of Ernst & Young assented to arbitration by continuing their employment after the company amended its employee policy governing alternative dispute resolution (ADR). Accordingly, the plaintiffs in Jaworski v. Ernst & Young were not entitled to pursue their age discrimination claims in court.

The Facts of the Case

 Plaintiffs Paul Jaworski, Alexander Haggis and Robert Holewinski filed suit against Ernst and Young, alleging that the accounting firm violated the state’s Law Against Discrimination by terminating them because of their age. Ernst & Young maintained that its ADR policy, known as the Common Ground Program, required the former employees to submit to mandatory arbitration.

Ernst and Young amended its arbitration policy at various points during the plaintiffs’ employment. Each time, the employees were provided notice of changes to the arbitration policy by electronic distribution. The policy provided that “an Employee indicates his or her agreement to the Program and is bound by its terms and conditions by beginning or continuing employment” with Ernst & Young after a specified date. As detailed in the court’s opinion, the issue before the court was whether remaining employed with the company “evinces an unmistakable indication that the employee affirmatively has agreed to arbitrate his claims pursuant to the changed policy.”

The Court’s Decision

 The Appellate Division answered in the affirmative, holding that Ernst & Young’s ADR policy was valid and enforceable.

As Judge Jerome St. John explained, continued employment has been found to constitute sufficient consideration to support certain employment-related agreements under New Jersey law. With respect to arbitration, New Jersey courts have further held that some concrete manifestation of the employee’s intent, as reflected in the text of the agreement itself, is required.

In this case, the court noted that the ADR policy expressly stated employees indicated their agreement to be bound to the program through their continued employment. Moreover, the plaintiffs continued to work for Ernst & Young after the effective date set forth in the policy, “thus manifesting his intent to be bound pursuant to the unambiguous and specifically-emphasized terms of the Program.”

The appeals court further rejected the plaintiffs’ argument that the ADR program constitutes an illusory agreement because Ernst & Young retains the right to unilaterally modify its terms. According to the court, the company’s policy was not illusory because it provided employees with 30 days notice of the changes. As further explained in the opinion, some flexibility is required so that “an employer is able to respond to developments in the law by adopting changes to its ADR policy without the prohibitively burdensome and costly obligation to negotiate the terms with each and every one of its employees.”