Pfizer Inc.’s use of a computer training program to obtain employees’ agreement to binding arbitration of work disputes has been ruled inadequate by a New Jersey appeals court.

The court said employers seeking to institute a mandatory arbitration policy for job-related disputes still must obtain their employees’ knowing and explicit assent, even where the policy is disseminated electronically rather than on paper.

At issue was Pfizer’s use of email to announce to its workforce the company’s new, mandatory arbitration policy. The policy was presented on a series of slides on computer screens, with the third slide asking employees to “acknowledge” the policy with a click. The program declared that anyone who did not click the acknowledgment but continued to work for the company for 60 days was “deemed” to be bound by the arbitration policy.

Transmitted through the same portal used for many employee training exercises, the company’s binding arbitration agreement was referred to as a “training module” or “training activity.” But “these prosaic labels do not fairly capture the essence of the endeavor, i.e. an effort to extract an employee’s knowing and voluntary agreement to waive important rights that have been bestowed upon him or her by law,” the appeals court ruled in Skuse v. Pfizer.

Obtaining an employee’s binding waiver of his or her legal rights is “not on a par with routine or mundane training subjects, such as how to obtain an assigned space in an employee parking lot or process a travel voucher,” the panel said.

A critical shortcoming of Pfizer’s procedure to obtain its employees’ assent to waive their rights is the click box at the end of the presentation, which uses the word “acknowledge,” rather than “agree.” And unlike other important legal documents, such as a car loan or house purchase, the employee is not asked to initial key provisions of the Pfizer arbitration agreement, the court said. The final slide thanks the employee for “reviewing” the document, and the whole process is referred to a “training activity.”

“Communications so vital to the mutual process of contract formation should not hinge upon loose and inconsistent wording that is reasonably capable of being misunderstood as something short of an agreement,” the panel wrote.

Pfizer’s arbitration policy was at the center of a suit filed by a flight attendant for the company, Amy Skuse. She sued the company after she was fired for refusing to receive a yellow fever vaccine. Pfizer policy required its flight attendants to receive vaccines, but Skuse, a practicing Buddhist, maintains that she does not receive injections containing animal protein.

Skuse requested a religious accommodation from the vaccine requirement, but the company refused and dismissed her. Skuse sued Pfizer and several individuals in Mercer County Superior Court. There, Judge Kay Walcott-Henderson granted Pfizer’s motion to dismiss the suit and refer the matter to binding arbitration. Walcott-Henderson observed that Pfizer’s acknowledgment procedure never asked the plaintiff to confirm that she received the agreement. But in light of the plaintiff’s continued employment past the specified 60 days, the judge concluded she intended to be bound by the agreement, dismissing the complaint with prejudice and ordering the case to arbitration. 

Skuse appealed, and Appellate Division Judges Jack Sabatino, Michael Haas and Stephanie Ann Mitterhoff reversed. Lawyers for Pfizer and for two amicus groups, the New Jersey Civil Justice Institute and the Employers Association of New Jersey, said Walcott-Henderson’s ruling should be affirmed as “an appropriate decision for our digital age,” Sabatino wrote.

Walcott-Henderson’s decision relied on a 2015 Appellate Division ruling, Jaworski v. Ernst & Young U.S., in finding that Pfizer’s 60-day provision was sufficient to manifest the plaintiff’s assent to the arbitration policy.

In Jaworski, an employee who signed an employment agreement that encompassed an arbitration program, but did not sign anything after the arbitration policy was amended, was held to be bound by the amended policy because he continued working for the company for five years after the amendment.

But the Skuse panel said they “respectfully decline to follow our sister panel’s ruling in Jaworski,” since there was no “explicit, affirmative agreement” in that case showing an employee’s assent to arbitration.

The lawyer for Skuse, Alan Schorr of Cherry Hill, said the decision represented the court’s application of a 2003 Supreme Court ruling, Leodori v. CIGNA, to current business practices, in which emails have replaced many paper documents. The Leodori case said an employee’s waiver of rights results only from an “explicit, affirmative agreement.”

Pfizer was represented by John Nolan of Jackson Lewis in Philadelphia. A Pfizer spokeswoman, Sally Beatty, said of the ruling, “We do not agree with the court’s decision and do not believe it is supported by the facts or the applicable law. We are reviewing our options for appeal to the New Jersey Supreme Court.”