Is it prudent for employers to require employees to sign mandatory arbitration agreements? There is no right or wrong answer to that question… just a long list of pros and cons. Proponents of mandatory arbitration often focus on factors such as confidentiality, the ability to remove the risk of a “runaway jury,” and cost. Conversely, opponents of mandatory arbitration often focus on factors such as the potential for the arbitrator to “split the baby” in an effort to appease both sides, limited discovery, cost, and limited appellate rights.
For employers who have adopted mandatory arbitration policies, the Fifth District Court of Appeal in Florida (with jurisdiction over Hernando, Lake, Marion, Citris, Sumter, Flagler, Putnam, St. Johns, Volusia, Orange, Osceola, Brevard, and Seminole Counties) recently issued an order that may make it more difficult for employers to enforce mandatory arbitration agreements, particularly arbitration agreements in employment contracts.
In Saunders v. St. Cloud 192 Pet Doc Hospital, Saunders, who worked as a veterinarian for Pet Doc, sued Pet Doc in Circuit Court (the trial court) for sex discrimination under an Osceola County ordinance, negligent hiring, negligent training, and negligent supervision. Pet Doc attempted to compel arbitration of Saunders’ claims pursuant to an employment agreement that required Saunders to arbitrate “any claim or controversy that arises out of or relates to” the employment agreement. Pet Doc argued that Saunders’ claims “arose out of” the employment agreement because she would not have been employed by Pet Doc (and, therefore, would not have asserted claims against Pet Doc) if she had not signed the employment agreement.
The Circuit Court agreed with Pet Doc and sent the case to arbitration. The Court of Appeal, however, reversed the Circuit Court’s order, holding that the employment agreement did not require arbitration of Saunders’ claims. Specifically, the Court of Appeal held that the employment agreement did, in fact, create a legal relationship between the parties, but that Saunders’ claims “did not relate directly to the contract itself.” Saunders did not sue Pet Doc for breach of the employment contract, and the claims she asserted did not require interpretation of the employment contract. So, the Court of Appeal sent the case back to the trial court.
While the impact of the Court of Appeal’s decision in Saunders remains unclear, it would be prudent for Florida employers using mandatory arbitration agreements to ensure that the scope of the arbitration provision is sufficiently broad to cover any and all disputes relating to or arising out of the employment relationship, including, without limitation, claims for breach of contract, statutory claims and claims arising under local law/ordinance, and/or common-law tort claims. In doing so, an employer may have a stronger argument (perhaps stronger than Pet Doc had in the Saunders case) that the parties expressly contemplated arbitration of all disputes.
With apologies to Dr. Seuss:
Writing what you want
Is quite an achievement;
When it comes to arbitrating all disputes,
Put it in your employment agreement!