Signature not enough to bind worker to arbitration clause

Mandatory arbitration agreements, which require employers and employees to forego court if they get into a legal dispute with one another and take the case to a private third-party arbitrator to resolve, are a popular way for employers to avoid the unpredictability and expense of the court system.

But if you plan on subjecting workers to such agreements, it’s critical to give actual notice of the terms, as a restaurant in North Carolina recently learned.

In that case, two white employees who worked under a Latino supervisor alleged that he often made racist remarks to them, saying among other things that because they weren’t Hispanic, they couldn’t relate to customers or co-workers or handle day-to-day situations.

Within a two month period the two men were fired for, respectively, inventory abuse and insubordination. They were each replaced by Latino workers and ultimately brought race discrimination claims against the employer.

The restaurant moved to have the case dismissed, arguing that the men’s claims were covered by a mandatory arbitration provision that they agreed to when they were hired.

But a federal judge refused to dismiss the case, concluding that even if the plaintiffs signed an “acknowledgements page” stating that they received a copy of the agreement they never actually had an opportunity to review its terms. The fact that the terms were available on the company’s internal website wasn’t enough to show that the workers had read them or that the provision had been provided to them before they had to sign.

As a result, the judge said, their signatures were meaningless and the case could proceed in court.