Employers May Require Applicants to Submit Pre-Employment Disputes to Binding Arbitration

GENERAL EMPLOYMENT LAW DEVELOPMENTS

In a case involving a disappointed job applicant, the Fourth Circuit upheld the use of arbitration agreements to govern the resolution of pre-employment discrimination claims. The employer in this case, a large electronics retailer, used an application form containing an arbitration agreement, which provided that all pre- and post-employment disputes would be submitted to binding arbitration. The application also stated that, unless the applicant signed the agreement, he or she need not complete the rest of the application, as it would not be processed or considered. The plaintiff signed the agreement and completed the application, after which it was processed and considered by management. Ultimately, the employer did not extend an offer of employment to the plaintiff, a decision she believed to be the result of discrimination. She sued in federal court, and the employer moved to dismiss based on the arbitration agreement. The district court denied the motion, holding that the arbitration agreement lacked adequate consideration. The Fourth Circuit reversed, however, holding that there was adequate consideration in that both applicant and employer agreed to be bound by the arbitration process. Johnson v. Circuit City Stores, 148 F.3d 373 (4th Cir. 1998).