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Continued employment and a mutual obligation to arbitrate are adequate consideration for an arbitration provision in an employment agreement, a federal court in South Carolina held.
In McCollum v. Tenet Healthcare Corporation, No. 0:06-1934-JFA-BM, 2006 WL 3373096 (D. S.C. Nov. 20, 2006), McCollum, a former employee of Tenet, brought a variety of Title VII and tort claims against Tenet.
Tenet petitioned the court to compel arbitration pursuant to an Employee Acknowledgment Form, signed by McCollum and containing a clear arbitration provision. McCollum argued that the agreement to arbitrate was invalid for lack of consideration.
However, the Court disagreed and compelled arbitration of the dispute. First, the Court noted that continued employment has often been held to be sufficient consideration for an agreement to arbitrate. Second, the fact that the arbitration agreement required the employer as well as the employee to submit to arbitration qualified as adequate consideration.
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