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According to a federal district court in Georgia, employees adequately notified of the addition of an arbitration agreement to terms of employment are bound by the agreement’s terms if the employee is informed of his or her ability to opt out of the policy and fails to affirmatively do so within the allotted period of time.
In Johnson v. Macy’s South, LLC, No. 1:07-cv-1256-WSD, 2007 WL 2904126 (N.D. Ga. Sept. 27, 2007), Johnson was employed by Macy’s as a part-time security officer. During the course of Johnson’s employment, Macy’s implemented a policy requiring mandatory arbitration of employment-related disputes. Macy’s notified current employees, including Johnson, of the dispute resolution policy both at work and through mailings. While Macy’s offered employees the option of affirmatively opting out of the policy through the return of an election form, Johnson failed to do so by the opt-out deadline.
Later, Johnson brought an age discrimination claim against Macy’s for its alleged failure to promote him to a full-time position. Macy’s moved to compel arbitration of the age discrimination claim. Johnson opposed arbitration, maintaining that the policy was unenforceable as a matter of law, since Macy’s notification did not constitute an offer, he did not accept the offer, and there was no consideration for the change in employment terms.
The Court first held that Macy’s had properly notified Johnson of the change in policy. The Court noted that the policy was presented to employees in informational sessions at work as well as through additional materials in the mail, constituting adequate notice of the change in policy and its effective date.
The Court next held that Johnson had accepted the dispute resolution policy by failing to return the election form within a certain period of time. The Court found Johnson was fully informed of the means by which to decline the new dispute policy, but he failed to do so.
Finally, the Court held that Macy’s had provided adequate consideration to Johnson in securing the change in employment terms. Under Georgia law, observed the Court, mutual promises and obligations are sufficient consideration to support a contract. Since Johnson received such consideration through Macy’s promise that it was obligated to arbitrate disputes and pay for the costs of arbitration, the Court found the addition of the dispute policy was supported by adequate consideration.
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