The Sixth Circuit Court of Appeals has ruled that when employers ask employees to sign an agreement waiving the right to bring future employment claims in court, the agreement can only be valid if the employer provides the employee with sufficient information about the alternative process being proposed. Sufficiently detailed information must be provided by the employer at the time the waiver is signed; otherwise, the waiver will not be considered “knowing and intelligent” and it will be deemed invalid.
In Alonso v. Huron Valley Ambulance, Inc., No. 09-1812 (6th Cir. Apr. 26, 2010), the employer had required all new employees to sign an agreement that any future employment claims would be litigated before an internal grievance board, with the employee waiving the right to sue in court. The agreement also required employees to bring any employment claims within six months of the disputed employment action, with the employee waiving any longer statutes of limitation. For years, courts have permitted these types of arrangements in theory. The Alonso decision, however, provides new clarification as to how these waivers must be implemented in practice.
The dispute arose when the Alonsos, a husband and wife, sued Huron Valley Ambulance, Inc. (“HVA”) for employment discrimination. When the Alonsos interviewed for employment with HVA, each signed an employment application with a provision waiving any right to pursue a future employment claim in court. The waiver provided that an internal grievance board would determine all claims and that the employee agreed to bring any such claims within six months of the disputed event. The employer did not, however, provide any further detail about the grievance board at that time. Several weeks later, when HVA hired the Alonsos, the Alonsos received a policy manual that included a basic description of the grievance board process and referenced a website where employees could find further detail.
HVA moved to dismiss the Alonsos’ lawsuit on the grounds that it was barred by the waiver, and the district court agreed. The Court of Appeals, however, reversed. The Sixth Circuit reinstated the lawsuit, holding that the Alonsos’ waiver was not “knowing and intelligent” because the employer failed to provide the Alonsos with information sufficient to explain the alternative grievance procedure they were agreeing to follow. The Court ruled that this deficiency rendered the waiver invalid in its entirety, voiding the statute of limitations portion of the waiver as well. The Court held that a “knowing and intelligent” waiver requires that the employer provide the employee with detailed information regarding the alternative grievance process at the time the waiver is signed. Citing other decisions, the Court suggested that this detailed information should include an explanation of who oversees the process (for instance, a neutral arbitrator), what rules govern the process, and the steps of the process.
In the Alonsos’ case, the Court indicated that not only was the employer too late in providing the policy manual, but the policy manual contained insufficient detail about the grievance process to make the waiver “knowing and intelligent,” even if the manual had been provided at the same time the waiver was signed. The employee still would have had to access a separate website to obtain enough information to understand the process. The Court implied that if the Alonsos had been given an opportunity to revoke the waiver after receiving detailed information about the grievance process, the waiver might have been valid, but the employer failed to offer the Alonsos this opportunity as well.
This case has important implications for employers in the Sixth Circuit (Ohio, Michigan, Tennessee, and Kentucky). Employers may ask employees to waive the right to bring future employment claims in court and to waive the right to bring such claims more than six months after the adverse event occurs. To maximize the likelihood that such an agreement will be enforceable, however, employers should provide the employee with detailed information regarding the alternative process at the time the employee signs the waiver. This detailed information should explain, at a minimum:
The Alonso decision does not guarantee that providing such information would make this type of waiver enforceable under all circumstances. The Alonso decision also does not address the features that an alternative grievance process must contain to be enforceable (although a series of other cases delve into those topics). After Alonso, however, employers are forewarned: An agreement not to bring future employment claims in court is not going to be valid unless the employer has first provided the employee with detailed information about the alternative dispute resolution procedure to be applied.
We hope you find this information helpful. If you have any questions, please contact Todd H. Lebowitz ( or 216.861.7899) or your regular Baker Hostetler contact.
Authorship Credit: Todd H. Lebowitz and Sara L. Witt
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