“PLEASE, DON’T SIGN NOW, TAKE IT HOME AND THINK IT OVER”: A Cautionary Tale for Employers

A recent decision from the New Jersey Appellate Division serves as a warning to employers requiring  employees to sign a bevy of employment-related documents during an orientation period.  The case, Imperato v. Medwell, LLC, concerned the enforceability of Mutual Agreement to Arbitrate all employment related disputes.

The employee acknowledged that she signed the agreement on her fourth day of employment with the employer.  Immediately above the employee’s signature line was a section titled “Voluntary Agreement,” which read in all capital letters:

I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I UNDERSTAND ITS TERMS, THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME RELATING TO THE SUBJECTS COVERED IN THE AGREEMENT ARE CONTAINED IN IT, AND THAT I HAVE ENTERED INTO THE AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THE AGREEMENT ITSELF.

I UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.

I FURTHER ACKNOWLEDGE THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THE OPPORTUNITY TO THE EXTENT I WISH TO DO SO.

Following her termination, the employee filed suit against the employer in the New Jersey Superior Court and the employer moved to enforce arbitration under the executed Mutual Agreement to Arbitrate.  The trial level and appellate courts disagreed and found the agreement unenforceable.  Where did the employer go wrong?

The evidence of “inconspicuous intimidation or coercion.”  Although the employee admitted to signing the agreement, she maintained she did so after being called to her manager’s office to sign papers to “officially be hired.”  The manager sat opposite the employee, handed her papers to sign, and pointed to where she should sign and initial.  The employee claimed she was not told she could take the document home to review with family or counsel and felt compelled to sign the documents “to keep her job and get paid.”  For his part, the manager could not recall the circumstances of the employee hiring process.

Based upon this testimony, the trial court found that “the scenario upon which the employer requested [the employee’s] signatures injected a high level of intimidation, pressure and compression which eviscerated the paper acknowledgement.” The court further described the signing as “an employer-orchestrated signing event, which was days after plaintiff got a taste of what it would be like to have a paid steady job in a respectable environment.”  The court concluded that the testimonial evidence painted  “a lucid picture of either a guided direction for a quick signature on a very important issue or is evidence of inconspicuous intimidation or coercion.” Either way, the court reasoned that the employee did not knowingly and voluntarily give up her right to a jury trial in favor of arbitrating her employment disputes.  Finally, the court noted that the agreement was entitled a “Mutual Agreement to Arbitrate” but there was no signature line for the employer to sign.   The Appellate Division refused to disturb the lower court’s findings and refused to enforce arbitration.

So, what’s the moral of the story? If this case teaches us one thing it’s this – employers should mail (electronically or via regular mail) employees any documents containing a waiver of employment rights by the employee, and include a clear statement that the employee has a reasonable period of time (e.g., 7 days) to review and return the documents to the employer.  This would include employment agreements containing mandatory arbitration provisions, jury trial waivers, class-action waivers or any restrictive covenants that restrict the employee’s ability to compete after termination.  Whether the employee in fact reads the document before signing is of no consequence, so long as the employer has evidence that the employee was not pressured into signing the document and was offered sufficient time to consider the document and consult with counsel before signing.  In addition, if the agreement is entitled a “mutual” agreement, the employer should be sure to execute the document as well.