New Jersey Employment Attorneys Blog
Earlier this month, Mashel Law defeated an attempt by a Defendant-Employer to dismiss our client’s whistleblowing lawsuit brought under New Jersey’s Conscientious Employee Protection Act (CEPA) and compel it to be decided through forced private arbitration. Arbitration is where parties contractually agree to resolve legal disputes through a private method of alternative dispute resolution involving what is supposed to be a neutral person who sits as judge and jury and renders a binding decision. This means under arbitration parties waive their right to sue in court to resolve their legal disputes. Employers often force employees to sign arbitration agreements as a condition of employment because arbitration is extremely one sided in favor of employers. As explained in an article published in the Nation last year it is so one sided because arbitrators:
“… are typically defense lawyers who have experience defending companies against discrimination claims … “It’s not like a jury where you have a cross section of society,” he said. What they decide is binding; there is no right to appeal the outcome. And years of evidence shows that their decisions are overwhelmingly slanted in favor of employers. Employees win in arbitration only about 20 percent of the time, compared to a nearly 60 percent win rate in state courts. If they do win, they are likely to get less money. Average damages for employees in arbitration are less than $24,000 but nearly $144,000 in federal court and over $328,000 in state court.”
In our client’s case, the Defendant-Employer argued in support of its motion application that our client was provided an Employee Handbook, and she signed an Acknowledgement which specified that all disputes arising out of her employment would be subject to mandatory arbitration. Therefore, the Defendant-Employer submitted that our client should be compelled to proceed through arbitration in the manner specified in the Employee Handbook and Acknowledgement. In opposition, Mashel Law argued that the motion to dismiss and compel arbitration should be denied because, among other reasons, no valid contract to arbitrate existed and the Defendant-Employer could not satisfy its burden of establishing as a matter of law that our client knowingly and voluntarily entered into an agreement to arbitrate her whistleblower claims.
When reviewing a motion to compel arbitration, the court is to apply a two-prong inquiry: (1) whether there is a valid and enforceable agreement to arbitrate disputes, and (2) whether the dispute falls within the scope of the agreement. Martindale v. Sandvik, Inc., 173 N.J. 76, 86, 92 (2002). “Under state law, ‘if parties agree on essential terms and manifest intention to be bound by these terms, they have created an enforceable contract.’” Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 135 (2020) (quoting Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992)). “Simply put, without an agreement to arbitrate, there can be no arbitration.” MZM Const. Co. v. N.J. Bldg. Laborers Statewide Benefit Funds, 974 F.3d 386, 397 (3d Cir. 2020). An agreement to arbitrate, like any other contract, “must be the product of mutual assent, as determined under customary principles of contract law.” Atalese v. U.S. Legal Services Group, L.P. 219 N.J. 430, 432-433 (2014) quoting NAACP of Camden Cnty. E. v. Foulke Mgmt., 421 N.J. Super. 404, 424 (App. Div.), certif. granted, 209 N.J. 96 (2011), and appeal dismissed, 213 N.J. 47 (2013). A legally enforceable agreement requires “a meeting of the minds.” Id. quoting Morton v. 4 Orchard Land Trust, 180 N.J. 118, 120 (2004). New Jersey courts also look to state-law contract principles involving waiver of rights. Atalese, supra., 219 N.J. at 441. Any contractual waiver of rights, including arbitration provisions and contracts of adhesions, must reflect that the parties have clearly and unambiguously agreed to the terms. Id. at 443. The parties must have full knowledge of their rights and show an intent to surrender those rights. Id. And, “to pass muster … a waiver-of-rights provision should at least provide that the employee agrees to arbitrate all statutory claims arising out of the employment relationship or its termination. It should also reflect the employee’s general understanding of the type of claims included in the waiver, e.g., workplace discrimination claims.” Garfinkel v. Morristown Obstetrics & Gynecology Associates, P.A., 168 N.J. 124, 135 (2001).
Mashel Law persuasively demonstrated to the court how the language in the Handbook unambiguously and plainly stated, “[t]his Employee Handbook is not a contract.” The Acknowledgement also informs the employee “[n]othing in this Handbook provides any entitlement to me or to any Company employee, nor is it intended to create contractual obligations of any kind.” Accordingly, Defendant-Employer did not intend their Handbook to be a binding contract. The record before the court also demonstrated there was no “mutual assent” between the parties to arbitrate nor does evidence of a “meeting of the minds” to arbitrate exist between the parties. Mashel Law further argued that the Handbook did not explain the differences between arbitration and bringing a lawsuit in court as is required under Atalese. There was no provision in the Handbook stating that our client-Plaintiff was surrendering her statutory rights under CEPA or even mentioning retaliation claims, and therefore, the Handbook “does not pass muster” when it comes to the creation of an enforceable arbitration agreement.
If you believe you are or have been a victim of unlawful workplace discrimination, whistleblowing retaliation and/or failure to pay earned wages you are urged to call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help. Mashel Law, located in Marlboro, New Jersey, is dedicated to protecting the rights of its employees.