To Click or Not to Click: NJ Appellate Division Reaffirms Enforceability of Electronic Arbitration Agreements

On March 7, 2023, in Dakota Powell vs. Prime Comms Retail LLC, the New Jersey Appellate Division ruled that a former employee must arbitrate her claims of race discrimination, rather than pursue them in court due to her electronic acknowledgement of a Mutual Agreement to Arbitrate upon hiring. The decision in Powell further confirms the growing acceptance of arbitration agreements by the New Jersey courts in New Jersey Law Against Discrimination (NJLAD) cases.

Facts

Dakota Powell was hired as a sales representative for Prime Comms Retail LLC, an AT&T retailer, on October 15, 2020. At her time of hire, she was sent an email with an individual username and temporary password to log into the company’s Human Resources (HR) portal. In addition to resetting her password, Powell also needed to add her name, social security number and date of birth. Once Powell registered on the HR Portal, she was required to review and sign the company’s policies, including its Mutual Agreement to Arbitrate (MAA). Powell was also required to sign and agree to the company’s Agreement to Receipt of Electronic Information and Use of Electronic Signatures. The MAA clearly stated, “My electronic signature on this document is governed by my Agreement to Receipt of Electronic Information and Use of Electronic Signatures.” Prime's HR Director thereafter certified Powell’s execution of the HR policies and agreements and explained that they are all required to be signed by new hires as a condition of receiving pay.

During her employment, Powell received a text from her manager allegedly containing a racial slur. Powell complained to her District Manager and thereafter transferred to another location. Four days after she filed a complaint with HR, Powell was terminated.

Trial Court & Appellate Decisions

Powell thereafter filed suit against Prime alleging discrimination, hostile work environment, disparate treatment, and retaliation under the NJLAD. Thereafter, the parties agreed to engage in limited discovery regarding whether Powell consented to arbitrate her NJLAD claims when she was hired. At her deposition, Powell admitted the only way for someone to register as her on the HR portal was if they had her social security number and date of birth. Powell admitted she had no reason to believe anyone else besides herself could have accessed the HR portal. Although Powell denied she clicked the box acknowledging receipt of the MAA, Powell admitted she was not rushed to review the MAA nor did she have any technical difficulties accessing the system.

Based on Powell’s deposition testimony, the trial court granted Prime’s motion to compel arbitration holding that the law is clear that continued employment after an employee “absolutely and unequivocally assents” to an agreement to arbitrate constitutes adequate consideration.

The Appellate Division affirmed the lower court's opinion and held that “clickwrap” agreements that require users to consent to terms and conditions by clicking on a dialog box in order to proceed are enforceable. Here, the record clearly indicated that Powell sent an email to HR requesting her username. Powell then logged into her account on the same date and updated her contact information. Prime’s "Policy Acknowledgement Status Report" also demonstrated she acknowledged all the HR policies Prime required of new employees, including the MAA and Receipt of Electronic Information and Use of Electronic Signatures. Therefore, based on Powell’s admissions, along with the evidence produced by Prime, the Appellate Division found there was clear and unambiguous proof Powell assented to binding arbitration.

Bottom Line

Employers are once again reminded that they should take all appropriate steps in the drafting and review of arbitration agreements to ensure that the agreement is one that would indicate mutual assent by both parties to submit to arbitration and waiving their rights to a jury trial. Moreover, employers utilizing electronic Clickwrap Agreements should require employees to create personal log-in information and require consent to terms or conditions of HR policies and agreements by clicking on a dialog box on the screen in order to proceed with the on-boarding hiring process.

For more information regarding this decision and best practices on how to implement and enforce Arbitration Agreements for your workforce, please contact John C. Petrella, Esq., lead Partner of the firm’s Employment Law & Litigation practice via email here or Dina M. Mastellone, Esq., lead Partner of the firm’s Human Resources Counseling & Compliance practice via email here, or call 973.533.0777.