Should employers be worried about the Supreme Court’s recent refusal to consider whether a waiver of a right to jury trial needs to be “knowing and voluntary” in discrimination, wage and hour, and pension cases? As general counsel, you already have enough concerns without adding the burden of considering whether your company’s jury waiver or arbitration agreements are enforceable. Typically, these agreements are contained within applications for employment, employee handbooks, or occasionally even in stand-alone documents. While the Supreme Court’s refusal to resolve a conflict among the circuit courts is disappointing, it is likely not determinative of whether your company can compel employment disputes to arbitration. Instead, given the trend in many federal and state courts, taking a few precautionary steps is likely to result in a valid waiver of a jury trial.

Typically, when individuals challenged jury waivers and arbitration agreements, they first argued that given the inequality of bargaining power, their “agreement” to these provisions was not voluntary, as refusal to agree would either result in not being hired or in losing employment. Following the Supreme Court’s decision in Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), however, courts began more often applying general contract principles, holding that employees are bound to such agreements in the absence of fraud, duress, or undue influence. Likewise, employees were more likely to be held to the agreements if they continued working (“under protest” or otherwise) after being informed that continued employment was conditioned upon submission of disputes to arbitration.

Another typical challenge to the enforceability of jury waivers or arbitration agreements is that the employer’s promise is illusory, and thus fails to provide consideration, when the employer retains the sole right to modify or rescind the program. While the “consideration challenge” can be resolved in a number of ways, such as providing consideration other than the employer’s promise to arbitrate disputes, even relatively minor limitations on the employer’s right to amend or rescind the program may be sufficient. For example, in a recent decision, the Maryland Supreme Court found sufficient consideration when the employer could affect changes to the program only after having given at least 30 days notice.

While there is yet to be complete uniformity across all 50 states and the federal courts, there are several steps an employer can take to enhance the likelihood an applicant or employee will be deemed to have waived the right to a jury trial and/or to submit employment claims to arbitration:

• Provide clear and obvious notice of the program, both in writing and orally;
• Give at least a general summary, making the specific rules available;
• Have individuals sign statements acknowledging receipt of information      regarding the program and their understanding thereof;
• Explicitly list statutory claims in the program and acknowledgement;
• Set forth in the acknowledgement that submission of the employment application, or continued employment, constitutes an agreement to be bound thereby; and
• Provide that the program may be amended or rescinded after 30 days notice.

Please contact the author at duerr@elarbeethompson.comfor more information.