May 21, 2019

May 20, 2019

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Arbitration Provision in Your Employee Handbook Is Not Enough

The recent New Jersey Appellate Division decision in Morgan v. Raymours Furniture Co. has left little doubt that arbitration provisions contained in employee handbooks are unlikely to be enforceable.

In the past, many employers have included arbitration agreements within their employee handbooks with the intention of requiring personnel to waive their right to bring certain types of legal claims in court and, instead, have their claims heard by an impartial arbitrator.  The idea of having a case (and damages) decided in arbitration by a legal professional is usually more appealing to employers when compared to the uncertainty and publicity of an often more expensive and time-consuming jury trial.  However, thanks to the Appellate Division’s decision, it is now quite clear that any employer serious about requiring arbitration should have their employees sign a separate, stand-alone, arbitration agreement.  The outcome of this decision is also an important reminder that employers should have their employee handbooks and other employee documents reviewed from time to time by counsel to ensure compliance with the ever-changing federal and state employment laws.

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About this Author

Ari G. Burd, Giordano Law Firm, Labor Employment Attorney
Associate

Mr. Burd practices in both the Labor and Employment Law Practice Area and the Health Care Practice Area. In the Labor and Employment Practice Area, Mr. Burd devotes his time to litigation and counseling employers with regard to traditional employment and labor related issues. Mr. Burd has extensive experience in both the state and federal courts in areas including retaliation, wrongful termination, wage and hour, sexual harassment and race, age, gender and disability discrimination. Mr. Burd also has considerable experience in assisting negotiating and drafting employment related...

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Jeri L. Abrams, Giordano Halleran,  Employment Documentation Lawyer, Workplace Litigation Attorney
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Jeri focuses primarily on employment law, with an emphasis on drafting and negotiating complex employment-related documentation, such as executive employment, consulting, restrictive covenant, commission, bonus, retention, change-in-control and severance agreements. Jeri counsels employers on a broad range of employment matters, including hiring, disciplining and terminating employees, family and medical leaves, disability leaves and accommodations, anti-discrimination and anti-retaliation laws, wage and hour compliance, and reductions in workforce. She works closely with management, in-house counsel, and human resources personnel in the development and implementation of employment policies and handbooks that comply with applicable law and are consistent with the employer's unique practices and organizational culture. Jeri also advises clients on the employment aspects of M&A deals and other corporate transactions.

Representative Matters 

  • Fortune 300 Company: Represented client in 4 separate recent acquisitions; drafted and negotiated complex executive employment agreements between the client and the founder of the acquired businesses, each of whom were integral to the value of the business being purchased.
  • Publicly-held Pharmaceutical Company: Represented client during a major workforce reorganization, which included 2 plant closures, staff relocations and a series of 9 reductions in workforce; worked closely with the client's legal and human resources departments to ensure the orderly separation of more than 600 employees and to minimize associated legal risks and business disruption; provided advice related to federal and state WARN act issues, wage and hour laws, OWBPA requirements and severance arrangements; prepared and negotiated severance agreements.
  • Publicly-held REIT: Advised client on a wide-array of unique employment matters in the context of the "spin-off" of one of its divisions.
  • Private Equity Firm: Represented large private equity client in connection with a high risk and sensitive termination of the CEO of one of its portfolio companies.
  • Private Equity Firm: Represented private equity firm in the drafting and negotiation of employment agreements for the senior executives of a large portfolio company.
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