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Want to arbitrate employment disputes? Ensure handbook doesn’t nix arbitration contract

by on
in Employment Law,Human Resources

Some North Carolina employers include an arbitration agreement in their employment policies. Such agreements are legal and enforceable if they form a contract.

But employers that include arbitration agreements in their employee handbooks may be making a mistake if they also declare that the handbook itself isn’t a contract.

Recent case: Wen-Chough worked for Duke University until he was terminated in a reduction in force. He sued, claiming he was really fired on account of his race, age or national origin.

Duke said the case should go to arbitration because when Wen-Chough acknowledged receiving the employee handbook, he had agreed that employment disputes would be handled via arbitration. However, it turned out that several versions of the acknowledgment were in circulation throughout the university.

Wen-Clough argued that the hand­­book he acknowledged receiving in­­cluded a clause that clearly said the handbook wasn’t a contract. Duke argued the acknowledgment that Wen-Chough signed included a statement that the arbitration agreement was contractual, while the rest of the handbook provisions were not.

The court, faced with two conflicting documents, ordered a trial. A jury will decide whether the arbitration agreement was an enforceable contract. (Lin v. Brodhead, et al., No. 1:09-CV-882, MD NC, 2012)

Final note: Have an attorney review your arbitration agreement to make sure it creates a contract in North Carolina. You may have to separate the agreement from the rest of the handbook. That way, the handbook isn’t a contract, but the arbitration agreement is.

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