SW Legal studies in Business

Employer Imposed Arbitration Program Agreed to by Continuing Employment
Description

Appeals court held that an employer that announced an arbitration program to cover employment disputes could enforce the program. Employees were free to quit if they did not want to be subject to the program, so continuing employment was consideration.

Topic

Alternate Dispute Resolution

Key Words

Arbitration, Assent, Employment Contract, Consideration

C A S E   S U M M A R Y
Facts

Seawright worked for AGF for 20 years when the company announced a new Employee Dispute Resolution (EDR) Program that required arbitration of all employment disputes, unless prohibited by law. Information was distributed to all employees that included a statement that “continuing employment with AGF means that you agree to resolve employment related claims against the company … through this process.” A couple years later, Seawright was fired. She sued, claiming the company violated her leave rights under the Family and Medical Leave Act. AGF moved to compel arbitration, the district court refused. AGF appealed.

Decision

Reversed and remanded. Arbitration is a contract. Seawright agreed to the contract as part of her employment agreement. By continuing to work, she accepted the arbitration agreement. The consideration she received for entering in the contract was continued employment. Both parties were equally bound by the agreement, so it was not a one-sided contract of adhesion or an unconscionable contract that could not be enforced.

Citation

Seawright v. American General Financial Services, Inc., 507 F.3d 967 (6th Cir., 2007)

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