Illinois high court validates arbitration agreement as condition of employment

SPRINGFIELD, Ill.—Employers have won additional judicial support for requiring that binding arbitration resolve wrongful termination claims filed by injured workers who could not meet return-to-work deadlines.

Recognizing a split among federal courts, the Illinois Supreme Court in March ruled that employers may require employees to agree as a condition of employment to submit any employment-related claims-including retaliatory termination charges by workers compensation claimants-to binding arbitration.

Employers often prefer to direct disputes to arbitration because the procedure is faster, less expensive, more private and less technical than a judicial proceeding.

In the Illinois case, Melena vs. Anheuser-Busch Inc., Joann Melena sued the brewer for allegedly terminating her in retaliation for filing a workers comp claim. Ms. Melena had worked at a Mount Vernon, Ill., distribution facility owned by St. Louis-based Anheuser-Busch.

The company filed motions asking the court to dismiss the suit and submit the case to binding arbitration. In court papers, Anheuser-Busch documented that Ms. Melena had signed a statement acknowledging she had received an employee handbook explaining that all employment-related disputes would be subject to arbitration. The company also had conducted employee-education campaigns about the procedure when it was introduced, according to court papers.

But a state trial court and an appellate court rejected the motion.

Noting that an arbitration agreement is enforceable only if an employee accepts it knowingly and voluntarily, the appellate court said it had "serious reservations" about whether such agreements could be voluntary when they are linked to conditions of employment. The court relied on a 9th U.S. Circuit Court of Appeals decision, even though the state appeals court recognized that several other federal appellate courts did not agree with the 9th Circuit.

In its 6-1 ruling, the Illinois Supreme Court rejected the state appellate court's and 9th Circuit's reasoning. Instead, the high court ruled that the enforceability of such agreements turn on contract law. Under contract law, the agreement is enforceable even if the signer did not understand its terms or was unaware the agreement included an arbitration requirement, the court noted.

In addition, citing U.S. Supreme Court precedent, the Illinois Supreme Court ruled that claimants do not sacrifice any of their "substantive rights" by submitting to arbitration. An arbitration requirement only moves claims to an "arbitral, rather than a judicial, forum," the court ruled.

Melena vs. Anheuser-Busch Inc., Illinois Supreme Court, March 23; No. 99421.