In Coady, et al. v. Nationwide Motor Sales (4th Cir., No. 20-2302, 4/25/2022), a group of employees sued the former employer alleging fraudulent payment practices. The employer moved to compel arbitration, relying on arbitration agreement language contained in its employee handbook. The trial court denied the motion, and the Fourth Circuit affirmed. The handbook’s acknowledgement receipt provided the employee had read and understood the employer’s policies, including the agreement to submit all disputes to arbitration. However, the receipt also provided the employer had “the right to abolish or modify existing policies, procedures or benefits applicable to employees as it may deem necessary with or without notice”. The court held the acknowledgement receipt was incorporated within the handbook’s arbitration provisions, but based on the employer’s right to unilaterally modify its policy and procedures, the agreement to arbitrate was illusory and therefore lacking in consideration under state law.
Fourth Circuit Denies Arbitration Under Employee Handbook Policy
