In the wake of an Appellate Division ruling invalidating Pfizer Inc.’s electronic distribution of a mandatory arbitration agreement to its workers, companies using computers and email to obtain employees’ approval of such policies should be candid about the arbitration agreement and its potential waiver of the employee’s statutory rights.
In Skuse v. Pfizer, the appeals court refused to enforce a mandatory arbitration agreement that the drugmaker emailed to employees for viewing during online training. In a Jan. 16 ruling, the appeals court said the manner of presenting the arbitration clause was too “oblique” and failed to provide the requisite assent of employees.
By asking them to “acknowledge” the mandatory arbitration policy by clicking on a box, rather than signing their names, the company failed to obtain “the valid personal agreement of an employee to give up his or her statutorily protected rights to litigate claims against an employer in a public forum and seek a trial by jury,” the appeals court said.
The appeals court in Skuse overturned a ruling that said the arbitration agreement was enforceable. The suit was brought by Amy Skuse, a former flight attendant on Pfizer’s corporate aircraft who said she refused to comply with the company’s vaccination policy for religious reasons.
Pfizer has asked the state Supreme Court to hear the case.
But even after the Skuse decision, employers needn’t rule out using computers and email to communicate with employees about an arbitration clause and to obtain their agreement to the policy, said Bruce Greenberg, a commercial litigator at Lite DePalma Greenberg in Newark.
“My impression is, employers who present candidly and directly what it is they’re looking for employees to agree to, won’t necessarily be precluded from doing what they want to do,” Greenberg said.
Greenberg noted that Judge Jack Sabatino, who wrote the Skuse decision, “said there was nothing necessarily wrong with using an email to do what Pfizer was looking to do. He emphasized that it was important to do it in a direct and straightforward fashion.”
Pfizer’s manner of presenting the arbitration agreement failed to recognize the serious nature of the issue, according to the panel of judges. The court said that “obtaining an employee’s binding waiver of his or her legal rights is not a training exercise. It 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.”
A critical flaw in Skuse was Pfizer’s use of a click box on its computer screen asking employees to “acknowledge” the policy. While such click boxes are an acceptable means of obtaining mutual assent, Pfizer should have done more, like including a conspicuous disclosure about the employee’s waiver of rights, and a place for employees to initial key provisions of the agreement, said Benjamin Widener, chairman of the employment law group at Stark & Stark in Lawrenceville.
Another key flaw in Pfizer’s approach was the way the arbitration agreement was presented to employees as a “training policy,” Widener said. In so doing, the court noted that Pfizer diluted the legal significance of the situation.
When implemented and communicated appropriately, arbitration agreements are perfectly enforceable, according to Widener. He cited Singh v. Uber, a 2017 case from the District of New Jersey that found a valid arbitration agreement existed between parties in an employment dispute.
The Singh case “presents a road map, so to speak, of rules and guidelines employers should follow if they intend to seek an employee’s agreement to arbitration by way of a web-based platform or electronic application,” Widener said. “When read along with Skuse, Singh provides that an arbitration agreement and waiver of rights is clear on its face, and not called something else.”
In addition, if there is a hyperlink to a complete written agreement, then the material terms of the agreement should be conspicuously displayed immediately above the electronic signature or box to click manifesting acceptance, Widener said.
“The employee should know this is an arbitration agreement, a very serious document,” Widener said. “The employee should understand that they are being requested to give up these rights and agree to this arbitration agreement.”
But Mitchell Schley, a plaintiff-side employment lawyer in East Brunswick, takes a more cautious approach. He says the message lawyers should take from Skuse is that email is not a valid means to transmit an arbitration clause to employees.
“People get a zillion emails in their box and a lot of it is junk” Schley said. “The Appellate Division said this is a very important issue, [so] you need a more affirmative agreement. The Appellate Division said email is off-limits,” Schley said.
According to Schley, the law concerning the validity of electronic approval of arbitration agreements is unsettled, making it risky to present such an agreement to employees via email.
“I think in New Jersey, that if you’re an employer, you have to be careful about utilizing emails as a mechanism for obtaining agreement to an arbitration policy, because of the Skuse case.”
Schley notes that Judge Kay Walcott-Henderson of the Mercer County Superior Court, whose decision to compel arbitration was overturned by the Appellate Division, relied on a 2015 Appellate Division ruling, Jaworski v. Ernst & Young U.S., in finding Pfizer’s arbitration policy was valid based on a clause holding that workers who continue with the company for 60 days after learning about the arbitration clause are deemed to be covered by it.
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.
Schley said the best way to present an arbitration agreement to employees and obtain their approval is to present them a printed copy and have them sign it. But, Schley said, handing employees a printed copy of the agreement might make them think twice about signing it.
Employees who are presented a paper document for their signature are apt to read it carefully and may balk at signing, Schley said. Aside from the convenience of using computer records instead of paper documents, Schley says, corporations such as Pfizer are presenting arbitration agreements electronically because “you end up with, perhaps, a lower rejection rate.”
Kevin Costello of Costello & Mains in Mount Laurel, a plaintiff’s-side employment lawyer, said the Appellate Division ruling in Skuse wasn’t saying that employers should not use a computer to obtain employees’ assent to an arbitration agreement. Rather, the court was criticizing the imprecise manner that Pfizer sought to announce the policy and obtain the agreement of employees.
“The language was indistinct. The waiver was not clear. Whether they used a computer or printed paper, the decision would have been the same,” Costello said.
Costello emphasizes that he considers mandatory arbitration of work disputes “a bad thing” because such cases are “generally won by the employer.” But the Appellate Division’s power to address the issue is limited, he said. “I don’t think the Appellate Division could have come down any harder than they have. What they’re saying is, if you’re going to take someone’s rights away, you’d better be clear, careful and complete.”
Costello said that until a legislative body takes away the ability of employers to force people to arbitrate disputes instead of bringing them before a jury, “the ingenuity of a corporate lawyer knows no bounds.” He added that computers are a medium that makes it easier to overwhelm people with information, citing online “terms and conditions” agreements that users routinely accept without reading.