Originally published on the Employer's Law Blog
The New Jersey Appellate Division recently affirmed the dismissal of a complaint by a former bank employee who claimed that she was discriminated against on the basis of her disability and need to take leave under the Family and Medical Leave Act ("FMLA"). The court found that the employee had signed a valid and binding agreement to submit claims related to her employment to arbitration.
According to the Court's opinion, plaintiff worked at a Washington Mutual Bank ("Bank") branch when she began experiencing complications related to her pregnancy. Unaware of her rights under the FMLA, she resigned rather than apply for leave. She later learned that she could have sought FMLA leave and attempted to rescind her resignation. The Bank allowed her to take short-term disability leave and some, though not all, of her FMLA leave entitlement. The Bank then refused to let her return to work at the conclusion of her FMLA and disability leaves. Plaintiff subsequently applied for an available position at a different branch of the Bank but was not hired.
Plaintiff filed suit asserting claims under the FMLA and the New Jersey Law Against Discrimination ("NJLAD"). The Bank moved to dismiss the lawsuit, arguing that the arbitration agreement that plaintiff signed at the time she was first hired required her to submit her claims to arbitration. The agreement provided that plaintiff was "waiving any right . . . to file a lawsuit or other civil action or proceeding relating to [her] employment." The agreement also enumerated various types of potential lawsuits that would be waived, including "claims of employment discrimination or harassment on the basis of race, sex, age, religion, color, national origin, sexual orientation, disability and veteran status," among others.
The Appellate Division held that valid arbitration agreements in the employment context must be specific enough so that employees understand they are waiving their access to courts and their right to a jury trial by signing the agreement. While a valid agreement does not need to specifically cite every statute that it covers, it should include a statement that it covers "all statutory claims" arising out of the individual's employment or termination and should also include a reference to "workplace discrimination claims." The Court also rejected plaintiff's argument that the FMLA prohibits arbitration agreements citing to the federal policy favoring arbitration and the Supreme Court's repeated approval of arbitration clauses in the employment context. Finally, the Court found that plaintiff's claim regarding the Bank's refusal to re-hire her was also covered by the arbitration agreement because it was "inextricably intertwined" with her other employment claims.
Pre-employment arbitration agreements remain a useful tool to avoid litigating matters in court. Employers should take note, however, that the Appellate Division considered carefully the precise language contained in the arbitration agreement here. Employers should consult with counsel when they are considering the use of arbitration agreements to ensure that the language of their agreements will withstand challenges by employees who attempt to circumvent them.
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