Supreme Court Upholds Use of Arbitration Agreement in Employment Disputes

On October 2, 2014, the Mississippi Supreme Court reached a decision in Smith v. Express Check (opinion here), that upheld the use of an arbitration agreement as a means of resolution for employment disputes. The arbitration provision, which was signed and acknowledged by the employee, Smith, at the outset of her employment with Express Check, was included in a pre-printed document entitled “Non-Competition and Confidentiality Agreement”. The Agreements specifically required all employment related disputes to be arbitrated. Smith signed the Agreement, and initialed a provision acknowledging she had read the entire agreement and accepted the arbitration provision. After being terminated, Smith filed suit claiming that she was fired for reporting her supervisor’s illegal acts. Express Check moved to compel arbitration of the claims pursuant to the Agreement. Smith argued that the Agreement was procedurally and substantively unconscionable and that she never knowingly agreed to arbitrate her employment related claims. The trial court, Clay County Circuit Judge Lee Howard, compelled arbitration finding that the arbitration clause was not unconscionable. Smith appealed and the Supreme Court agreed with the trial judge’s decision finding that the Agreement was not fair, that Smith had acknowledged her reading and understanding of the agreement, and that it was not unconscionable.

This is a win for employers within the State of Mississippi as arbitration agreements may offer a lesser expensive and faster resolution of employment related disputes. The case includes a detailed discussion of the factors that are considered to determine whether an arbitration provision is unconscionable. If you are uncertain whether an arbitration agreement would benefit your business, please contact us to discuss your options.