In Ricci v. Sears Holding Corporation, the District of New Jersey held that an employee’s electronic acknowledgement of an employment arbitration agreement constituted valid acceptance of the terms of the arbitration policy. In that case, the plaintiff worked as a “hardline merchandiser” for a Kmart store in New Jersey. During the course of his employment, Kmart developed an employment arbitration protocol and distributed it to employees for consideration and execution. Kmart required its employees to access the arbitration agreement online through Kmart’s intranet and complete a policy acknowledgment agreeing to abide by the arbitration agreement. To submit the acknowledgment, employees first clicked the “yes” button and then clicked “submit.”

In April 2012, the plaintiff completed the online acknowledgment agreeing to abide by the terms of the arbitration agreement. He later filed a complaint against Kmart for violations of the New Jersey Law Against Discrimination (“NJLAD”). Kmart filed a motion to compel arbitration and dismiss the complaint on the grounds that the plaintiff’s claim was barred because he entered into an enforceable employment arbitration agreement in April 2012. The Court granted the motion and dismissed the plaintiff’s lawsuit in its entity.

The Court’s analysis turned on whether the online acknowledgment that the plaintiff completed created a binding arbitration agreement. The plaintiff argued that he lacked knowledge of the existence of the arbitration agreement. He further claimed that the agreement was invalid because it lacked his signature and that by clicking “yes” and “submit” electronically, he did not properly assent to the arbitration agreement. The Court refuted this argument and noted that a handwritten signature is not required to create an enforceable contract. By clicking on the relevant electronic buttons, the plaintiff sufficiently acknowledged his assent to the arbitration agreement. As such, the Court enforced the arbitration agreement and dismissed the complaint.

Arbitration agreements are powerful tools to expedite resolution of claims and reduce legal expenses incurred in defending a lawsuit. Employers must clearly communicate their arbitration procedures to new and current employees and obtain express consent to be bound from employees. To ensure that their arbitration protocols and agreements are enforceable, employers should consider consulting with experienced counsel.