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Pre-employment arbitration agreement not ‘unconscionable’: Court

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Requiring a job candidate who had been out of work for six months to sign a pre-employment arbitration agreement as a condition of employment was not “unconscionable,” a federal appeals court said Friday in overturning a lower court decision.

Claire Lambert was 57 years old and had been unsuccessfully looking for a job for six months when she was offered a position at a unit of Louisville, Kentucky-based Signature Healthcare LLC that required her to sign an agreement to have employment disputes arbitrated, according to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Claire Lambert v. Signature Healthcare LLC.

After she was fired by Signature, she sued the company, charging violations of the Family and Medical Leave Act, the Fair Labor Standards Act and Florida law.

Signature moved to dismiss the case and compel arbitration. The U.S. District Court in West Palm Beach, Florida, denied the motion and was overturned by a unanimous three-judge appeals court panel.

The district court concluded that requiring the arbitration agreement was “procedurally unconscionable” because Ms. Lambert had not had a meaningful choice when she signed it, the appeals court ruling said.

“It reasoned that the Arbitration Agreement was presented on a take-it-or-leave-it basis as a condition of employment and that Lambert lacked alternative employment options,” it said.

But the fact that an arbitration agreement is presented on this basis “is not dispositive,” the panel said. The record “establishes that Lambert had the opportunity to ask questions about the arbitration agreement and consult with an attorney before signing the arbitration agreement, and she elected not to do so,” it said.

She also did not present evidence she had been actively discouraged or prevented from understanding the disputed contract terms, it said.

“For these reasons we decline to hold that under Florida law, an individual who was seeking employment for six months, applied to approximately two jobs per week during that period, and faced the difficult potential choice to retire early and incur penalties on retirement savings lacked a meaningful choice when she signed an arbitration agreement as a condition of employment,” the panel said, in overturning the lower court’s ruling.

Attorneys in the case did not respond to requests for comment.