It is not uncommon for employers to make an employee’s execution of an arbitration agreement a condition of their employment at the inception of the employee’s employment. But what happens when, in the midst of employment, an employer all of a sudden demands an employee’s agreement to an arbitration agreement under the threat of termination? Does an employee have to sign the arbitration agreement in order to remain employed? What if the employee refuses to sign the arbitration agreement and, as a result, is suspended and not permitted to return to work by their employer?
A recent New Jersey Superior Court has held that an employer cannot take adverse employment action against an employee who refuses to sign an arbitration agreement that requires her to waive her statutory rights under the Law Against Discrimination.
In Cator v. Hotel ML/Coco Key West Resort et al., Plaintiff, a black female, had made complaints about race discrimination during the course of her employment. During the same time period, her employer implemented a new policy mandating, as a condition of her continued employment, that all current and prospective employees execute an arbitration agreement. Plaintiff refused to execute the arbitration agreement and waive her statutory rights to have her claims of race discrimination adjudicated in a court of law and by a jury of her peers. In response to her refusal to sign the arbitration agreement, the employer suspended her from work and advised her that she would not be permitted to return to work unless and until she signed the arbitration agreement. As a result, the employee filed a lawsuit for claims under the New Jersey Law Against Discrimination. One of the claims was specifically whether an employer unlawful retaliates against an employee for refusing to sign an arbitration agreement that waives their statutory rights under the law.
The parties to the lawsuit agree that the sole reason the plaintiff was not permitted to work was because of her refusal to sign the arbitration agreement. As a result, the plaintiff moved for summary judgment for the Court to determine whether the employer’s refusal to permit her to return to work for this sole reason was a violation of the Law Against Discrimination. In granting summary judgment in favor of the plaintiff, the Court found that the employer’s suspension of Plaintiff from working as a result of her refusal to execute the arbitration agreement amounted to retaliation under the New Jersey Law Against Discrimination. Specifically, the Court found that by refusing to sign the arbitration agreement, the plaintiff had engaged in protected activity under the New Jersey Law Against Discrimination. The Court further noted that the New Jersey Law Against Discrimination affords the right of an employee to a jury trial and by forcing an employee to waive this statutory right as a condition of employment is unlawful.
This decision is an important win for all employees who refuse to waive their statutory rights under the law as a requirement for continued employment.