A recent string of federal cases has upheld the use of mandatory arbitration agreements in the employment context. Faced with this reality, plaintiffs seeking to try claims in front of a jury instead of an arbitrator increasingly look to state courts to attempt to avoid mandatory arbitration provisions. Earlier this year, the South Carolina Supreme Court upheld use of mandatory arbitration to personal injury claims filed by a former employee.

In Landers v. FDIC, the plaintiff was a bank officer employed under an employment contract with a mandatory arbitration agreement. He quit, claiming constructive discharge based on a number of alleged slanderous and humiliating actions by his supervisor. When the FDIC moved to compel arbitration, the trial court stated that the mandatory arbitration clause only covered the plaintiff's breach of contract claim, and that the tort actions could be heard in court because they did not relate to the terms of the employment contract.

The South Carolina Supreme Court disagreed, reversing the decision and remanding the matter for arbitration of all claims. The court looked to the Federal Arbitration Act in liberally construing the arbitration provision. The particular language used in the employment agreement stated that arbitration would be used for any controversy arising out of the contract. Rather than use a literal definition of this term, the court said that the personal injury claims were clearly related to the employment relationship described in the contract. The employer does not need to point to a specific clause of the agreement in order to compel arbitration of that particular claim.

South Carolina also applied this reasoning to the plaintiff's claims relating to his expulsion as a director and an alleged illegal proxy solicitation. Again, the court found a connection between these claims and the plaintiff's employment status, concluding that they fell within the scope of the arbitration clause. This case signals a strong public policy in South Carolina for use of mandatory arbitration. The employer in this case could have avoided some of this controversy by using an arbitration clause that encompassed any dispute relating to the employment relationship, and not just the contract itself.