Sixth Circuit Finds Arbitration Policy is Unenforceable Without Proof Employee Was Given Notice and Knew of It

This morning, the Sixth Circuit reversed an order to compel arbitration based on a lack of evidence that the employee knew about the arbitration policy. Hergenreder v. Bickford Senior Living Group, LLC., No. 10-1474 (6th Cir. 8/31/11). In that case, the plaintiff was hired as a nurse in October 2006 and soon thereafter required a medical leave of absence following a cancer diagnosis. When she attempted to return to work in December 2006, she was told there was no job for her and was notified that she had been fired (with the ability of being rehired) in January 2007 because she had not qualified for a medical leave of absence so soon after being hired. When she filed suit under the ADA, the employer moved to compel arbitration even though she had never signed an arbitration agreement. The employer could not rely on any arbitration provisions in the employee handbook because it contained numerous disclaimers that it was not a binding contract. The employer’s arbitration policy was purportedly distributed to all employees, but there was no evidence that it had been specifically distributed to plaintiff during the application process or after being hired. The plaintiff had never signed it and denied that she had ever seen it before the litigation. The Court, therefore concluded that she could not have agreed to arbitrate her claims and remanded the matter back to the District Court.

The Federal Arbitration Act only requires arbitration agreements to be in writing, but does not require them to be signed. However, both parties must still be aware of the terms of the agreement and agree to them. The employer argued that a reference to the dispute resolution policy in the employee handbook put the employee on notice of the arbitration policy and agreement. However, the Court disagreed because the handbook was not a contract and there were too few details (let alone no mention of the word arbitration) in the employee handbook to have put any employee on notice that s/he was agreeing to arbitrate his or her claims.

This statement says nothing about arbitration, and it says nothing that would indicate to Hergenreder that accepting or continuing her job with Bickford would constitute acceptance. Indeed, it is incorrect to conflate the fact that Hergenreder knew generally of the DRP with the notion that she knew of the arbitration language—and Bickford’s desire to create an arbitration agreement—contained within the DRP. Were Hergenreder required to read, or even notified of the importance of reading, the DRP, the analysis here might be different. But this court’s inquiry is focused on whether there is an objective manifestation of intent by Bickford to enter into an agreement with (and invite acceptance by) Hergenreder, and we are not convinced that there is any such manifestation made by Bickford in the record in this case.

In addition, even if the policy constituted an offer of an arbitration agreement, there was no evidence that the plaintiff’s continued employment constituted acceptance of that offer because she had never been informed that continuing employment constituted acceptance of the arbitration agreement.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.