January 1, 1900

by Julie Colin

Providing speedier and more efficient procedures for resolving employment disputes can save both employers and employees time and money. Recently, our New Jersey judiciary has answered a question that has been on the minds of many employers with regard to limiting such costs and even liability to employees. That question is whether an employee can waive a statutory entitlement to a jury trial by agreement with the employer. Most of the statutory entitlements under both Federal and State law, such as the Family Leave Act, the Americans with Disabilities Act, and the New Jersey Law Against Discrimination provide the aggrieved employee the option of demanding a trial by jury.

In two cases that have been heard within the past year, the courts have made it clear that so long as the language drafted by the employer is clear, and the employee accepts a position with knowledge of that provision, a waiver of rights to a jury trial, usually in favor of arbitration is valid. Prior to these decisions, employers and lawyers alike questioned whether courts would enforce contractual language drafted by employers which serves to negate rights established through the legislature.

Limiting An Employee’s Rights Through Contract

The courts have been careful to remind employers that if they choose to limit an employee’s statutory right to access to a jury trial, such waiver must be made in clear and unambiguous terms. The court will look to the contract and its contents to determine if the language put the employee on notice of such waiver. Prior to these decisions, there had been some doubt that the courts would enforce such a contract over the rights of the employee contained in the legislation.

In one recent case decided by the court, the employer included a clear notice of waiver in the employment application. The court found that the language was clear and that the employee, by signing the application for employment, agreed to arbitrate any matter concerning the terms and conditions of employment should the employee accept the job.

Employee Handbooks Can Be Binding Agreements

In the other recent case, the New Jersey Supreme Court held that language contained in an employee handbook served as a binding agreement between the employer and employee to arbitrate any matter arising out of the employment. The Court held that to be binding, the language must be clear as to what right an employee is giving up. Language that advises an employee that he is waiving his right to a jury trial in favor of arbitration for all federal, state and local laws, whether they are statutes, regulations or common law doctrines with regard to any claim arising from employment discrimination, employment conditions or termination, is enforceable.

Of course, it is important for employers to review the language of their contracts, handbooks and employment applications on a periodic basis to ensure that they not only comply with current law, but also to take advantage of the evolution of the law. Often waiver of rights clauses which force parties into arbitration for employment disputes result in a reduced exposure to excessive jury awards and keep legal fees to a minimum.

To determine if such language should be drafted into employment documents, or to determine if existing language complies with the current holdings of the court, employers should consult with counsel for a thorough review of documents.

Julie Colin is a partner of Hill Wallack where she is a member of the General Litigation and Employment & Labor Law Practice Groups. She concentrates her practice in personal injury including products liability, employment discrimination and premises liability with expertise in trial work including jury trials in defense litigation.