Affirming a trial court's denial of a motion to compel arbitration of an employment dispute, a New Jersey appellate court held that an employee must "clearly and unmistakably" agree to arbitrate claims arising under the Law Against Discrimination (LAD).

In Peters v. DPT Lakewood, Inc., No. A-5607-06T3, 2007 WL 4335440 (N.J. Super. Ct. App. Div. Dec. 13, 2007), DPT required Peters to sign a form acknowledging she read and understood DPT's "Dispute Resolution and Arbitration Policy" after it had acquired Peters' former employer in 2001. In 2006, DPT terminated Peters.

Peters sued DPT alleging it had terminated her because she suffered from bipolar disorder in violation of the LAD. DPT moved to compel arbitration pursuant to the Dispute Resolution and Arbitration Policy it distributed to Peters when it acquired the company. Peters opposed the motion, arguing that no one had explained or provided her with a document specifying that DPT's interpretation of the policy required her to arbitrate disputes arising out of the termination of her employment.

The trial court denied the motion, concluding that the Dispute Resolution and Arbitration Policy did not require arbitration of claims relating to employment termination. DPT appealed.

Affirming the trial court, the Court held that the arbitration agreement did not "clearly and unmistakably" require arbitration of LAD claims. Under New Jersey law, a court will not assume that employees intended to waive statutory rights under the LAD unless a waiver provides "that the employee agrees to arbitrate all statutory claims arising out of the employment agreement or its termination." Garfinkel v. Morristown Obstetrics & Gynecology Assoc., 168 N.J.134, 135 (2001).

Here, the language preceding the arbitration provision referred to "internal disputes," which the Court construed as applying only to disputes occurring during the course of employment rather than disputes arising from an employee's termination. Additionally, DPT did not have any internal dispute resolution procedures by which management could review an employee's termination. Therefore, the arbitration procedures mandated by DPT's Dispute Resolution and Arbitration Policy applied only to claims involving an ongoing employment relationship rather than termination of employment. Based on this ambiguity, the Court concluded Peters did not "clearly and unmistakably" agree to arbitrate LAD claims.