6th Circuit: Employees Responsible for Entering into Arbitration Agreements

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APPLIES TO

All Employers with Employees in KY, MI, OH, TN

EFFECTIVE

January 28, 2025

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Quick Look

  • Absent illegal activity from the employer, an employee is responsible for entering into an arbitration agreement.
  • Employers are not required to explain an arbitration agreement or provide notice that an employee may have legal counsel review the agreement.

Discussion:

In Gavette v. United Wholesale Mortgage, LLC, the Sixth Circuit Court of Appeals said that employees are themselves responsible for entering into arbitration agreements with employers in Michigan. Absent illegality of the contract, the arbitration agreement is enforceable.

 

There, an employee claimed that the arbitration agreement he entered into was not valid because the terms were not explained to him and he was not given notice that he could have his attorney review the agreement. Rather, the agreement said that the signer read and understood the terms of the agreement and that the agreement was binding on him. Further, the agreement specifically said that the employee was giving up his right to a trial by jury and must submit all claims to binding arbitration. The employer provided evidence that the employee created a unique login to access the documents and signed them outside of work hours on his own time.

 

The court said that the employee was responsible for his actions in signing the agreement. Moreover, there was no allegation that the employer “misstated the Agreement’s terms or otherwise induced his consent via misrepresentations” or duress. The employee’s failure to understand the agreement implies his own negligence in signing the agreement. Ultimately, the arbitration agreement was enforced.

 

Action Items

  1. Have arbitration agreements reviewed by legal counsel.
  2. Have appropriate personnel trained on onboarding processes.

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase