Category Archives: Employer Policy

Employee Handbooks, Employer Policy

Arbitration Policy in Employee Handbook Rejected as Insufficient to Show Agreement and Waiver

A New Jersey appellate court issued a wake-up call this month to employers that seek to impose mandatory arbitration provisions on employees through employee handbook policies.

In C.M. v. Maiden Re Insurance Services, LLC, the Appellate Division of the New Jersey Superior Court held that in order for an employee to surrender his or her right to pursue employment claims in a court of law, the employer must obtain an agreement with the employee that “reflect[s] an unambiguous intention to arbitrate” employment claims.  Putting a mandatory arbitration policy in an employee handbook and getting the employee to acknowledge receipt and agree to be “bound” by the terms of the handbook are not enough, if the handbook also contains the typical disclaimer that its provisions “are not intended to create contractual obligations.”

In Maiden Re Insurance, the employer placed a mandatory and binding arbitration policy at the end of its employee handbook, under the section, “Company Guidelines.”  The policy provided that any controversy or claim arising out of the employment relationship would be resolved through arbitration in accordance with the rules of the American Arbitration Association.

This arbitration policy followed a growing trend nationwide in which more and more employers are seeking to avoid the costs, time and risks of litigation and runaway jury verdicts that are inherent in our judicial system.  Courts across the country, led by the U.S. Supreme Court, have become more and more deferential to mandatory and binding arbitration agreements in employment, as provided by the Federal Arbitration Act and similar state laws, such as the New Jersey Arbitration Act.  This alternative-dispute-resolution (“ADR”) wave has accelerated in recent years as the U.S. Supreme Court also has enforced arbitration agreements that require employees to surrender their right to participate in class action and collective action claims against their employers as a condition of employment.

But the Appellate Division in Maiden Re Insurance reminds employers that courts will be vigilant to ensure an employee has knowingly given up his or rights before barring entry to the courthouse. The court noted the following issues which rendered the Maiden Re Insurance policy unenforceable (and which provide employers with a good checklist to ensure their ADR efforts don’t suffer the same fate):

  • A waiver must spell out the employee’s rights being surrendered. An effective waiver of the constitutional right to bring employment claims in court “requires a party to have full knowledge of his legal rights and intent to surrender those rights.”  The agreement therefore should references the rights being waived (including the right to a jury trial, if applicable) and the types of claims covered (such as discrimination, retaliation, wage claims, etc.).
  • The employee must unmistakably agree to arbitrate. To be enforceable, a waiver must “reflect an unambiguous intention” and “mutual assent” to arbitrate legal claims.  Maiden Re Insurance failed to produce any document showing that the employee had agreed to arbitrate her claims — and, of course, she denied that she had.
  • Do not rely on handbooks with disclaimers. It is “irreconcilable” for an employer to claim an employee is legally obligated to honor an arbitration clause in a handbook that she agreed to read and be “bound” by, if other sections of the handbook “prominently and unequivocally disclaim the handbook is intended to create a legally enforceable contract.” While some courts have enforced arbitration clauses in handbooks that do not have disclaimers, we strongly recommend that specific ADR agreements and waivers be obtained separate and apart from employee handbooks (and that the disclaimers remain in the handbooks to avoid unintended breach of contract claims).
  • Email acknowledgment of receipt is not enough. An employee’s email response acknowledging receipt of the employer’s handbook, which contains the policy, “is legally insufficient to constitute a knowing waiver of her constitutional rights to have [discrimination] claims decided by a jury.”
  • Get the employee’s signature. The failure to obtain either party’s signature on an arbitration agreement “is significant in assessing mutual assent.” While we all benefit from the ease of email, and an email message agreeing to a term may be sufficient in some circumstances, there is no better evidence of an agreement than an old-fashioned signed contract.

In sum, an arbitration policy in an employee handbook generally is not sufficient to form a binding agreement to arbitrate, due to the issues noted above. Employers that desire to avoid the risks of going to court should review the lessons of Maiden Re Insurance, and obtain a signed, unmistakably clear ADR agreement and waiver of rights from each employee, covering all claims relating to the employment relationship.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Employee Rights, Employer Policy, Employer Rights, Valentine's Day, Workplace Romance

Legal Alert – Valentine’s Day Edition: Is Office Romance Forbidden?

Guest Blogger: Adam Gersh, Shareholder, Flaster/Greenberg PC

It is Valentine’s Day and love is in the air, but also at the water cooler. A recent study found that—even in the age of online dating—the largest percentage of spouses met through work (21 percent). Another study found that 18 percent of couples who meet at work get married. Although it is inevitable that romances will develop out of workplace relationships, it is not all champagne and roses for employers, especially if a relationship sours.

From a legal perspective, consensual romantic relationships between coworkers, or even between a supervisor and an employee, do not, constitute sexual discrimination or harassment. Nonetheless, workplace romances can create particularly tricky situations for employers because:

  • Good relationships gone bad create risks (example: when a sexual harassment claim arises out of a failed relationship between a manager and subordinate, there may be extensive evidence of sexual or sexually suggestive conduct that is subject to multiple interpretations, some of which are unfavorable to an employer)
  • Disparity in work assignments arising from the relationship can negatively affect employment (example: upper management wants to discipline an employee who never works the night shift when, in reality, the employee’s schedule is a consequence of his romantic relationship with his direct supervisor who wants to keep the employee’s nights free for dating)
  • Favoritism causes peers to perceive they are being discriminated against (example: a paramour is not disciplined for late arrivals such that when her co-worker is disciplined, the co-worker believes she is a victim of discrimination)

Each situation is unique, but the underlying commonality is that romantic relationships between coworkers can throw off office equilibrium.

Due to the host of potential risks that may arise, employers should consider adopting policies to mitigate the risks caused by employees’ romantic relationships. However, there are no one-size-fits-all solutions. Larger employers may have the capacity to prohibit employee-supervisor relationships and adopt a policy of reassigning one of the employees, but many smaller employers simply cannot create that kind of separation.

Though an outright ban on office romances is not always necessary (and often impractical), employers should make sure they are aware of and document relationships by, at the very least:

  • Adopting a policy requiring employees to disclose a workplace romantic relationship to human resources or a chief officer immediately, especially when the employees are in the same chain of command
  • Requiring the employees to acknowledge their relationship in writing (often with an agreement called a “love contract”), including, among other things, a statement that the relationship is consensual, that the employees understand they are still subject to and protected by the employer’s anti-harassment policies, and that the employees may be subject to discipline if they allow the relationship to interfere with their employment duties
  • Seeking a release of all potential legal claims

The key is for the organization to implement disclosure and response policies that fit the culture and manage risks.

Once an employer is on notice of a romantic relationship in the workplace, it should take steps to evaluate and reduce the risk, including enforcing its policies consistently. The consequences of inconsistent enforcement can be real. In a recent California case, an employee involved in a workplace romance alleged that his employer disciplined him differently from similarly-situated employees who also had workplace relationships.　The employee claimed he was treated differently due to discriminatory motives. This is just one example of the many ways inconsistent enforcement puts an employer at risk even if there is no discriminatory intent.

Does this mean there’s no place for love in the workplace? Certainly not. A number of studies have found that workplace romance can have a positive effect by increasing job performance, overall job satisfaction, an employee’s level of involvement, and organizational commitment. Well-tailored policies help employers maintain stability in the workplace and limit the risks that arise from office romances.

We simply suggest that employers create and enforce strong policies that meet their situation.

This is the blog of Michael Homans. Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

 

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Employer Policy, Employer Rights, PA Wage Payment and Control Law

If a Pennsylvania employer’s sales commission plan is unclear when the commission is “earned,” the employer may be on the hook for paying commissions to a terminated salesperson — even if the plan requires employment at the time of payment to receive the commissions.

If a Pennsylvania employer’s sales commission plan is unclear when the commission is “earned,” the employer may be on the hook for paying commissions to a terminated salesperson — even if the plan requires employment at the time of payment to receive the commissions.

That’s the surprising holding in O’Donnell v. Passport Health Communications, Inc., decided earlier this year by Chief Judge Petrese Tucker of the U.S. District Court for the Eastern District of Pennsylvania.

Pennsylvania’s Wage Payment and Collection Law does not create any substantive rights to compensation; rather it provides an avenue for an employee to enforce his or her right to be paid wages earned, per an agreement with the employer.

In O’Donnell, Passport Health’s sales commission plan provided sales commissions for the fourth quarter of 2010 were not paid out until February of 2011, and required the employee “must be employed at the time of payment to receive commissions.” The court noted, however, the plan did not make clear when the commissions were “earned,” which is vitally important under the Wage Payment and Collection Law. That statute provides that “Whenever an employer separates an employe[e] from the payroll, or whenever an employe[e] quits or resigns his employment, the wages or compensation earned shall become due and payable not later than the next regular payday of his employer on which such wages would otherwise be due and payable” (emphasis added).

The court held that, because the plan did not specify when the commissions were “earned,” a reasonable jury could find that the commissions were earned at some point prior to termination (i.e., by the end of the fourth quarter), and to fail to pay the commissions upon termination would be an unlawful “forfeiture,” despite the plan language indicating the employee had to be employed at the time of “payment” to receive the commission.

Action item: As a result of this decision, Pennsylvania employers should review their sales commission or bonus plans, and ensure the plan language clearly states commissions or bonuses are not “earned” until the time of payment, if that is the employer’s intent, and consider adding a statement explaining the rationale for such a rule (such as continuing the client relationship and servicing the sale).

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Employee Rights, Employer Policy, Employer Rights, National Labor Relations Board, NLRB, Section 7 Rights Under the NLRB, Union

Hats off to the NLRB.

An administrative law judge for the National Labor Relations Board ruled recently that an employer policy prohibiting the wearing of baseball caps other than the employer’s caps violated workers’ Section 7 rights under the National Labor Relations Act.

This might sound like bald overreaching, but the policy had the effect of precluding employees from displaying union logos or other protected messages on their hats. Under the Act, employees generally are allowed to display union insignia in the workplace, unless the employer can establish a special rule or reason to prohibit them.

In this case, Quad Graphics, Inc., decided July 31, 2013, the employer proffered a hat trick of three reasons for the rule, all of which the judge rejected:
Safety reasons, to keep hair out of machinery — but, alas, the judge found no evidence that union hats were less safe than employer hats;

  1. Fear of gang activity, i.e., that other hats might encourage it — despite the lack of evidence of gang activity (but it sounded good!); and
  2. Better employee-customer interactions — which might have prevailed, but for the lack of any evidence that the workers interacted with customers.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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