Illinois Supreme Court Endorses Enforcing Arbitration Agreements in the Employment Setting
The Illinois Supreme Court has joined several federal courts in finding that the enforceability of mandatory arbitration agreements for certain employment claims should be analyzed according to general contract standards. In Melena v. Anheuser-Busch, Inc., the court rejected the heightened "knowing and voluntary" standard advocated by the employee in favor of the more employer-friendly approach of viewing an arbitration agreement like other contracts. Following these principles, the court enforced the agreement to arbitrate, requiring the employee to arbitrate her workers' compensation retaliation claim against her former employer. The Melena decision could have broad-reaching effects on the utilization and enforceability of employer arbitration programs in Illinois.
In 2000, Anheuser-Busch implemented a dispute resolution program for its employees that required the arbitration of "employment-related claims against the company and individual managers acting within the scope of their employment, regarding termination and/or alleged unlawful or illegal conduct on the part of the company." The company forwarded materials describing the program to its employees, including a policy statement which stated that "by continuing or accepting an offer of employment with Anheuser-Busch" the employees agreed as a condition of employment to submit all covered claims to the dispute resolution program. Anheuser-Busch also conducted a presentation and question and answer session on the new dispute resolution program, and placed posters about the new program throughout the facility. The following year Anheuser-Busch distributed a new employee handbook which included a description of the program and referenced the program materials, and required employees to sign an acknowledgment form in which they agreed to adhere to the policies and procedures set forth in the handbook, and acknowledged that the handbook did not create an employment contract.
The plaintiff, who had suffered a work-related injury and filed a workers compensation claim in 2002, was terminated by Anheuser-Busch in March, 2003 while out on temporary total disability. She filed a complaint in state court alleging that Anheuser-Busch discharged her in retaliation for her filing the workers' compensation claim. The court denied Anheuser-Busch's motion to compel arbitration of the claim. The appellate court affirmed, finding that the arbitration agreement was not enforceable because the plaintiff had not entered it "knowingly and voluntarily." The appellate court also noted that it had "serious reservations" about whether an agreement to arbitrate offered as a condition to employment could ever be "voluntary".
The Illinois Supreme Court reversed, finding that the liberal policy favoring arbitration agreements set forth in the Federal Arbitration Act required courts to analyze the enforceability of employment arbitration agreements according to general contract principles, and not a heightened "knowing and voluntary" standard. The court went on to find that the employee's continued employment constituted sufficient consideration for the enforcement of the arbitration agreements. The court also rejected the plaintiff's argument that mandatory arbitration contravened the public policy behind the retaliatory discharge cause of action, noting that nothing in the Workers Compensation Act or case law regarding retaliatory discharge revealed an intent to preclude waiver of judicial forum for such claims. Because the arbitration agreement in this instance did not limit the plaintiff's remedies, arbitration could serve the same remedial and deterrent functions of litigation. That the arbitration agreement required the employer to pay all costs of arbitration was also relevant as it vitiated any argument that arbitral costs would preclude plaintiffs from vindicating their statutory rights.
While it is difficult to predict the reach of the decision, it is clear that, in least some instances, mandatory agreements to arbitrate statutory employment claims are enforceable. Companies that have mandatory arbitration agreement should review these agreements in light of the Melena decision. Those that do not should consider implementing arbitration agreements as a means to avoid litigation.
Schiff Hardin LLP