Am I Bound by an Employment Arbitration Agreement I Never Received?

Arbitration agreements are popular with many New York employers who see it as a more effective way of resolving employment-related disputes. From an employee's perspective, however, arbitration agreements frequently restrict their right to pursue actions for employment discrimination and other violations of federal and state laws designed to protect their rights in the workplace.

If your employer pressures you to sign an arbitration agreement, you need to carefully consider the ramifications. If the agreement contains an “opt-out” provision, make sure you exercise it in a manner that is clear and unambiguous. Federal courts tend to strongly favor arbitration agreements, which puts the burden on the employee to prove he or she did not consent.

Second Circuit Revives Dispute Over Existence of Arbitration Agreement

Here is a cautionary tale from a recent opinion by the U.S. Second Circuit Court of Appeals here in New York City. The plaintiff in this case worked at a large, well-known New York department store for approximately 18 years. About six years into his employment, the store implemented a new “employee dispute resolution process.” This process included binding arbitration of all employment-related disputes.

However, employees were permitted to “opt out” of the arbitration requirement by filing a written form with the company. According to the store, it sent all employees–including the plaintiff–a packet of materials in 2003, which included the “Election Form,” together with instructions on how to “decline the benefits of arbitration.” The store said it sent a similar package to the plaintiff the following year, but on neither occasion did the plaintiff file the Election Form.

After the store fired the plaintiff in 2015, he filed a lawsuit in federal court alleging disability discrimination. More specifically, the plaintiff said he was fired due a learning disability that significantly impairs his ability to “read and process information.” The plaintiff further alleged he never received any of the alleged “Election Forms,” and that he did not consent to arbitration.

In an affidavit, the plaintiff explained that due to his learning disability, he regularly asked his brother to read and explain any mail addressed to the plaintiff. Neither the plaintiff nor his brother could recall ever seeing any “arbitration-relation documents.” Another employee separately confirmed that she also never “received any written or verbal information” regarding an opt-out process.

A federal district court judge denied the store's motion to compel arbitration on these facts, holding that the store could not prove there was ever a valid agreement. The Second Circuit vacated that decision and returned the case to the district court for reconsideration. Essentially, the appeals court and the district court disagreed as to whether or not the Election Form itself constituted a valid “offer.” The Second Circuit said that while the language of the store's form was “somewhat disingenuous,” it could still be understood as an arbitration agreement.

The Second Circuit further held that if the plaintiff received the form as the store alleges, his “silence” or failure to return the Election Form would constitute “acceptance” of the arbitration agreement under New York law. But since the question of receipt remains in dispute, further proceedings in the district court are necessary.

Do Not Sign Before Talking to a Lawyer

If you receive any type of employment agreement or form from your employer and you do not understand its meaning, you should speak with a qualified New York employment attorney right away. Contact the Law Offices of Nisar Law Group, P.C., if you need help today.