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Include summary of arb agreement in receipt

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in Employment Law,Human Resources

Here’s some good news for employers that use arbitration agreements. If you require employees to accept arbitration as a condition of employment, you can include a brief statement describing the plan in an acknowledgment.

As long as the acknowledgment shows that the employee may read the entire arbitration agreement before signing, it doesn’t matter whether she actually does. The key is to provide the opportunity.

Recent case: Tonya Baumann worked for retailer The Finish Line for about six weeks before she was fired. She sued, claiming she had been terminated because she complained about harassment and inconsiderate treatment after suffering a miscarriage.

The Finish Line asked the court to send her claims to arbitration. It said Baumann had signed an acknowledgment before being hired that said all employment claims must be arbitrated as a condition of employment. The acknowledgment also stated, “Complete details of my agreement to submit these claims to arbitration are contained in The Finish Line, Inc. Employee Dispute Resolution Plan, which has been made available for my review prior to the execution of this agreement.”

Baumann countered that she never actually read the agreement and therefore wasn’t bound.

The 7th Circuit Court of Appeals disagreed and ordered arbitration. It said that applicants don’t have to sign a copy of the entire agreement as long as it is referenced in the acknowledgment they do sign and they could have read it if they chose to. (Baumann v. The Finish Line, No. 09-3389, 7th Cir., 2011)

Final note: Now is a good time to have your attorneys review arbitration agreements. The U.S. Supreme Court has recently signaled that it favors enforcing arbitration agreements, including ones that waive the right to class-action litigation. Take advantage of this.

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