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Agreement to Arbitrate Acknowledged, Not Accepted, Eighth Circuit Says

Recent workplace arbitration jurisprudence from the Supreme Court of the United States has drawn quite a bit of attention in the employment arena, and rightfully so. In Lewis v. Epic Systems, the Supreme Court approved class action waivers in arbitration agreements, and in Lamps Plus, Inc. v. Varela, the Court held that an ambiguous arbitration agreement cannot provide the basis for concluding that the parties agreed to class arbitration.

Despite these landmark decisions, the Eighth Circuit recently highlighted that the mere presence (in an employee handbook) of an arbitration provision with class and collective action waivers may not be enough for an employer to compel individual, bilateral arbitration of employment disputes.

In Shockley v. PrimeLending, the Eighth Circuit agreed with the district court that the applicable arbitration and delegation provisions contained in the employee handbook were not enforceable contracts under Missouri state law.

The plaintiff employee brought suit alleging that the defendant employer violated the Fair Labor Standards Act (FLSA) by failing to properly pay her earned wages and overtime. The defendant thereafter moved to compel arbitration based upon the arbitration and delegation provisions. The arbitration provision provided that the employer and employee would resolve disputes arising under the FLSA through arbitration, and that the ability to initiate a class or collective action was waived. Similarly, the delegation provision stated that arbitrator had the sole authority to interpret the arbitration provision.

Agreements to arbitrate are a matter of contract law. While it was undisputed that these arbitration provisions were contained in the electronically-accessible employee handbook, the court found that no contract had been formed under Missouri contract law. On two separate occasions, the plaintiff had been electronically presented with the employee handbook containing these provisions. And on each occasion, the plaintiff clicked on an acknowledgement of review. However, she did not recall actually reviewing the employee handbook, and there was no evidence that she ever reviewed its text.

On these facts, the court held that, at best, the defendant could only show that the employee acknowledged the existence of the provisions. Applying Missouri contract law, the Eighth Circuit held that the plaintiff’s “mere review of the subject materials did not constitute an acceptance on her part.” Without the plaintiff’s acceptance, no contract had been formed, and thus arbitration could not be compelled.

This case provides an important reminder to employers: even though workplace arbitration agreements can be a useful litigation management tool, the manner in which an arbitration program is implemented and maintained is of critical importance. Even with the recent pro-arbitration decisions from the Supreme Court, employers would do well to remain mindful that arbitration agreements are a matter of state contract law, and thus require valid contract formation.

© 2020 BARNES & THORNBURG LLPNational Law Review, Volume IX, Number 198


About this Author

Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment

Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...

Mark Wallin, Attorney, BT, Chicago, Labor Employment
Of Counsel

In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of employment matters including wage and hour class and collective actions, as well as complex, multi-plaintiff and single plaintiff employment discrimination claims brought not only by private plaintiffs but also initiated by the Equal Employment Opportunity Commission (EEOC).

Mark has successfully represented companies of virtually all sizes, litigating matters across multiple areas of the law, from the pleading stage through appeal. He has also represented clients in arbitrations and before administrative bodies.

Mark vigilantly stays abreast of cases, laws, and trends that may impact his clients coming out of the courts, Congress and the state legislature, as well as the U.S. Department of Labor, the EEOC, and state regulatory agencies. He strives to keep a watchful eye on how labor and employment related laws are evolving so as to proactively advise clients.

In addition to his regular legal practice, Mark has undertaken several pro bono cases including trying criminal jury trials in state and federal court, and representing indigent plaintiffs in civil rights matters as part of the federal Trial Bar.

Mark began honing his litigation skill during law school when he interned at the U.S. Attorney’s office for the Northern District of Illinois, where he handled both civil and criminal issues. He also interned for a judge on the U.S. Court of Appeals for the Seventh Circuit, which gave him a unique vantage of seeing the issues from the court’s perspective.