It is becoming a more common practice for employers to insert arbitration clauses into contracts for employment. Arbitration clauses specify that if an employment dispute arises, rather than go to court, the employer and employee agree to arbitration in a designated forum. Arbitration proceedings tend to be less formal than court proceedings, but also have fewer safeguards – the arbitrator may not necessarily be a judge or a lawyer, and may not necessarily abide by the prevailing law in coming to a decision. Once a ruling is made, it can be difficult to appeal to the trial court, and the employee may be stuck with the decision. That is a problem because more often than not, employers get to choose the arbitration firm, and the firm may show a bias toward employers in order to get repeat business.
Unfortunately for employees looking to sue in court, the United States Supreme Court has held that the Federal Arbitration Act of 1925 supercedes state laws that mandate certain grievances be litigated in court. The only exceptions that state courts have been able to carve out have had to do with the “unconscionability” of the arbitration clause — that the clause was both an unfair surprise and incredibly oppressive to one of the contracting parties. Yet too often arbitration clauses are upheld, cutting off employees’ options for redress.
Recently, the Sixth Circuit Court of Appeals held that another employee was bound by the arbitration clause in Tillman v. Macy’s, Inc. Cecilia Tillman was an employee of May’s Department Store in 2005, when May’s merged with Macy’s and she became a Macy’s employee. After the merger, Macy’s premiered its Solutions inSTORE program, which outlined a four-step dispute resolution process that ended with binding arbitration for both Macy’s and the employee. Any employee who participated in the program waived his or her right to file a lawsuit in court. Macy’s claimed that it explained the policy in a mailing and during a video training, and employees had the right to opt out if they filled out a certain form. Tillman attended the training, but argued that Macy’s “breezed over” the information about mandatory arbitration. She further argued that merely continuing to work as an employee of Macy’s should not constitute a waiver of her right to file a lawsuit in court.
The Sixth Circuit held otherwise, claiming that, based on contract formation rules, once Tillman was informed of her right to opt out, she knowingly waived her right to file in court by continuing to work for Macy’s. The Court felt that Macy’s had sufficiently explained the arbitration and opt out policy so that employees like Tillman could make an informed choice.
Whether or not Macy’s did sufficiently explain the arbitration process, the Sixth Circuit’s decision is troubling. One can imagine cases where an employer offers information in the most indirect way, only for a court to find later that its education of employees was “sufficient.” Yet most employees are not lawyers, and need more than a fast, vague description to understand such complexities as arbitration and waiver of legal rights. There is no indication whether Tillman, or an employee with a similar case, will seek Supreme Court review, but it would not be surprising. Meanwhile, if you live in Kentucky and have an employment issue, contact a Kentucky employment law attorney to find out more about your options.
Miller & Falkner is a plaintiffs law firm serving residents of Kentucky and Indiana. Located in Louisville, Kentucky, the firm provides representation in the areas of personal injury and employment law. Contact us today for a free consultation.