Arbitration Agreements: The Gifts That Keep On Giving

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arbitration agreements Alabama Employment Law
Arbitration agreements can be binding even if they were signed during a different period of employment.

Diamonds are forever — and so are employment arbitration agreements.  That’s the lesson to be learned from Gillian v. Cowabunga, Inc., No. 2-17-cv-01389-JEO, 2018 WL 2431345 (May 30, 2018).  (For fans of Teenage Mutant Ninja Turtles, I unsuccessfully tried to find a way to work “Cowabunga, Dude!” into the title of this blog post.)

Scarlett Gillian was first employed by Cowabunga from November 2015 to March 2016.  When she was first hired, Ms. Gillian signed an agreement to arbitrate any disputes relating to her employment.  Ms. Gillian quit her job on March 14, 2016, but was re-hired on May 4, 2016.  She did not sign an arbitration agreement when she was re-hired.  Ms. Gillian claimed that she was sexually harassed during her second period of employment and filed suit in federal court.  Cowabunga moved to dismiss that lawsuit and claimed that Ms. Gillian was required to arbitrate any claims because of her prior arbitration agreement.  Ms. Gillian argued that she should not be required to arbitrate because she did not sign a new arbitration agreement when she was re-hired.

United States Magistrate Judge John Ott agreed with Cowabunga.  There appears to be no authority from the Eleventh Circuit Court of Appeals on this issue.  Nevertheless, Judge Ott relied upon decisions from several United States District Court Judges.  His opinion hinged upon the following conclusion:  “Where an arbitration agreement contains express language indicating intent for the agreement to survive termination of employment, parties may be compelled to arbitrate claims arising during subsequent re-employment.”  Gillian, 2017 WL 2431345 at *2.  Ms. Gillian’s arbitration agreement contained an express provision stating that it survived termination of her employment.  Therefore, Judge Ott found that she could be compelled to arbitrate, even though she did not sign a new arbitration agreement when she was re-hired.

Gillian provides employers with another way to avoid lawsuits in federal court.  Of course, if you are a regular reader of my blog, you know that arbitration agreements aren’t always a perfect solution for employers:  Arbitration Isn’t Always Good for Employers.  Nevertheless, if you require your employees to sign an arbitration agreement, you should make sure that the agreement also contains a provision stating that the agreement survives termination of employment.

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