Why A Court Returned Best Buy’s Employment Arbitration Policy For A Full Refund

By Mark F. Kluger and William H. Healey

Best Buy may have a great return policy, but according to a New Jersey appeals court, its employment arbitration policy should not have made it past store security. In a recent decision, the court refused to enforce a policy that required the discount retailer’s employees to arbitrate all employment related claims against the company. The reasons are important to understand for any employer that wants to require arbitration of employment claims.

In March 2016, Best Buy introduced its new policy to all employees through what it called an “eLearning program.” Ok stop right there. Who puts a capital letter in the middle of a noun? It looks like someone needs to E-learn or re-learn some grammar. The policy provided that a terminated employee could “choose to file a formal legal claim [and]….Effective March 15, 2016, you will bring that claim in arbitration rather than in court.” Simple, right? Here’s where it seems Best Buy may have gotten some discount legal advice. At the end of the policy, there is the following statement: “I have read and understand the Best Buy Arbitration Policy” followed by a box for the employee to e-check beneath the words, “I acknowledge.”

So when the 46 year old store manager was fired on April 5, 2016, and sued for age discrimination (which is just plain wrong because 46 IS NOT OLD), the court threw out the case and sent the parties to arbitration based on the Best Buy policy, receipt of which the employee had acknowledged. But Best Buy and the lower court missed one really important requirement for employees to effectively waive the right to sue in court and agree to arbitration—the actual AGREEMENT. The employee “acknowledged” that he had “read” and understood the policy, but it was not acknowledged that he ever agreed to it.

Now Best Buy thought it had the agreement part covered. The policy also said: “by …remaining employed…employees agree to the Policy terms.” Ok sure, so in other words, by not quitting when the policy is implemented, the company expected that to count as an agreement. And we thought Eddie was crazy!

In rejecting Best Buy’s policy, the appellate court said that to enforce a waiver of the right to sue and mandate arbitration, there must be an affirmative assent by the employee to the terms. Just acknowledging and staying on the job is not enough. The court wrote: “a handwritten signature is the customary and perhaps surest indication of assent” (two points for old school), but went on to state that even if this e-nonsense had just provided for a clear agreement to the terms, something as simple as adding “and agree” to “I acknowledge” would have  made the policy an enforceable agreement. The court also noted that if just staying in the job was sufficient assent, the guy in this case was fired 3 weeks after the policy became effective so, he did not have much of a chance to actually demonstrate his consent to arbitration.

There is one other important point that the court failed to address. At-will employees do not have the luxury to agree to or disagree with policies. That would be like having employees agree to the Equal Employment Opportunity or Sexual Harassment policies in order to be able to enforce them. What’s the lesson here? If an employer wants to require employment disputes to be arbitrated, it must do so in an actual agreement that makes clear that the employee understands that he/she is waiving the important right to sue in court, and instead agrees to bring all claims in arbitration.

Now that you have a clear picture of what Best Buy did wrong, so you can avoid the same fate, you should know that we typically do not recommend arbitration for employment claims. While there had been some benefits to arbitration, few remain.

The upsides are that arbitration is private, likely avoids headlines and there is no wildcard jury. The downsides are that the arbitrators are expensive and get paid by the hour (and we want to be the only ones in that category), discovery has become as extensive as it is in court litigation and maybe most importantly, every case (unless settled) goes to “trial” because there is no motion practice (like in court), and even if agreed to by the parties, arbitrators have no interest in granting summary judgment dismissing the case. Finally, there is no right to appeal, except in extremely rare and unlikely circumstances. We like our chances better in court.

While Best Buy may not have enforceable employment policies, they do have great prices on laptops and desktops, which ensures that you never miss one of our employment law alerts.