Handbook Is No Arb. Agreement

By Lori Phillips

In Lorenzo v. Prime Communications, L.P., No. 14-1727 (4th Cir. Nov. 24, 2015), Lorenzo sued her former employer, Prime Communications, L.P. (“Prime”), for minimum wage and overtime violations. Prime tried to compel arbitration based on an arbitration provision in the employee handbook. The court denied Prime’s motion to compel, because Lorenzo had not agreed to arbitrate. Lorenzo received the employee handbook and signed a form acknowledging receipt. But, like all handbooks, this one stated that nothing in the handbook “should be construed to create any bind[ing] promises or contractual obligations between the Company and the employees” and that the handbook provided “guidelines only” which were not meant “to be interpreted as a contract.” As the Court held: “Any implied assent that might have been created by Lorenzo’s receipt and review of the Handbook and by her continued employment was nullified by the express agreement of the parties not to be bound by any of the Handbook’s terms.”

Arbitration provisions don’t usually belong in an employee handbook, for just this reason. You don’t want your handbook to be a contract; you do want your arb. agreement to be a contract.