Ohio Court of Appeals Refuses to Compel Employees to Arbitrate Disputes

The Eighth District Court of Appeals in Hardwick v. Sherwin-Williams Co., No 81575, 2002 WL 31992364 (2003), held that employees cannot be compelled to arbitrate disputes with their employer where the employees did not mutually assent to the employer's arbitration policy and the policy relied on by the employer did not clearly and unambiguously identify arbitration of disputes as a mandatory condition of employment.

The two plaintiffs each worked for Sherwin-Williams for more than seventeen years. During their employment, the employer promulgated a Problem Resolution Procedures ("PRP") leaflet. In part, it provided that the PRP "may be used by employees to challenge unresolved differences regarding application of Company policies, procedures or practices which affect their employment situation, and will be the exclusive method for addressing the work-related issues as they arise . . . Further understand that if this procedure is not used, it may preclude employees from pursuing any legal rights they may have in court or in other forums." The policy applied unilaterally to employees as it specified that "it does not cover any legal claims that the Company may have against its employees."

At some time after the PRP was promulgated, plaintiffs advanced claims against Sherwin-Williams alleging sexual harassment and other tortuous misconduct. They alleged that such acts resulted in their constructive discharges. Their complaints were filed with the Equal Employment Opportunity Commission and then with the Cuyahoga County Court of Common Pleas.

In the Court of Common Pleas, the trial court denied the employer's efforts to stay proceedings and to compel arbitration. The Court of Appeals affirmed the trial court's denial of Sherwin-Williams' request to stay proceedings and compel arbitration. The Court found that neither plaintiff "assented to the PRP." Such absence of mutual assent was evidenced by the following:

(1) The employees did not sign or even acknowledge receipt of the PRP at the time of its distribution;

(2) Nowhere in the PRP did it suggest that the employees must agree to comply with its procedures in order to continue employment with employer;

(3) In correspondence with plaintiffs on the topic of the PRP, the employer never specifically stated or alleged the binding or mandatory nature of the PRP; and

(4) There was no agreement binding plaintiffs to the provisions of the PRP as their exclusive remedy.

The Court also criticized the loose, somewhat permissive wording of the PRP itself. Particularly, the Court noted that the PRP stated that "these procedures may be used by employees" and that all employees were "eligible" to use the outlined procedures. The Court also found that the terms of the PRP did not adequately acknowledge the exclusivity of the PRP. Based on these findings, the Court concluded that the PRP could not be held to compel employees to arbitrate their disputes with the employer. This case is instructive for employers as it emphasizes the necessity that compulsory arbitration policies be clear and unambiguous, and that they be acknowledged and assented to by employees as a mandatory condition of employment. Employer policies that lack any such elements run the risk of being found unenforceable.