Employment Group

As many employers in our litigious society know, there are a number of laws that require employers to generate and distribute written policies to their employees. To comply with these laws and show that their policies are applied in a consistent manner, employers often draft handbooks that explain and give notice to employees of various employment policies, procedures, and benefits. Oftentimes, employers require employees to sign acknowledgment forms in connection with their receipt of employee handbooks. However, the publication of a handbook and the signing of a form do not necessarily mean the employee understands its contents, a situation that could expose the company to lawsuits.

Recently, the Superior Court of Pennsylvania addressed the issue of whether an employee is bound by arbitration provisions found in an employee handbook when, despite having signed an acknowledgment form stating that she had read the handbook, the employee had not actually received a copy of the handbook.

In the Superior Court case, the Plaintiff sued her former employer claiming that the company had falsely accused her of stealing money and that she was terminated for that reason. The employer filed a petition with the court seeking to require the woman to arbitrate the dispute in accordance with the dispute resolution procedures set forth in the company's employee handbook.

The trial court held an evidentiary hearing on the issue, during which the woman Plaintiff, two other former employees of the defendant company, and a manager of the company each testified. The trial court found that the employees' testimony was credible and that it was "customary practice by [the company manager] not to supply employee handbooks to new hirees." The trial court found, in addition, that the woman had never received or read the handbook – although at one point during the course of her employment she had requested a copy. 

Perhaps most significantly, the trial court found that the woman "signed the acknowledgment form under pressure from her supervisor." Specifically, she testified that the manager told her to "just 'f--' sign that because I'm going to get in trouble." The trial court held that under these circumstances "there was no meeting of the minds on any of the handbook terms, including the arbitration procedure." The court noted in reaching its decision that the woman was from Puerto Rico, was not familiar with the English language or the term "arbitration" in particular, and had not completed high school. For these reasons, the court denied the defendant's motion to compel arbitration.

The Superior Court's Decision
On appeal, the Superior Court affirmed the trial court's decision and concluded that "without a copy of the handbook, the woman was not even given the opportunity to read the terms of the arbitration agreement; there was no arbitration clause in the acknowledgment form signed by the woman, and nothing in the form indicated that she would be waiving her right to a judicial forum." The court could not hold that she had agreed to arbitrate her claims where she had not been given a copy of the handbook that contained the relevant arbitration provisions.

Lesson
The Superior Court's holding in the case contains an important lesson. Certainly, employers should produce handbooks for their employees, both to introduce employees to the organization and to protect themselves against lawsuits. However, even the most comprehensive employee handbook may not serve these worthwhile purposes if the handbook is not actually distributed to, read, or understood by employees.

MacElree Harvey
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West Chester, PA 19381–0660
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