8th Circuit: Arbitration Agreements Must Be Enforceable Contracts

In Shockley v. PrimeLending, the Eighth Circuit Court of Appeal reminded employers that arbitration agreements must be enforceable contracts. There, the employer’s mandatory arbitration agreement and delegation clause existed only in its Handbook Addendum. The employee had received the Addendum electronically, which only required her to click on the Addendum link to generate an automatic acknowledgement that it was reviewed.  There was no evidence that the employee had actually ever opened the Handbook or Addendum and reviewed the arbitration policy.

Although federal law supports enforcement of arbitration agreements, whether or not an agreement exists is determined by state law. There, the court looked to applicable Missouri law to determine whether there was sufficient evidence of an offer, acceptance, and consideration. It stated that mere document review and a system-generated acknowledgement was not sufficient evidence of acceptance of the agreement.

Additionally, the court stated that “continued employment may constitute acceptance where the employer’s document clearly states that continued employment constitutes acceptance,” and the employer gives employees notice of that fact. However, that was not the case here. To ensure enforcement of arbitration terms, employers should implement standalone arbitration agreements for employees to sign, separate from employee handbook policies.

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