Despite your company's best efforts to treat employees fairly, there is a good chance that at some point a disgruntled employee or former employee will bring a lawsuit alleging some type of workplace misconduct. The complaint may even name you in your individual capacity, along with the company, as a defendant in the case. If the company cannot get the lawsuit dismissed by the court or cannot settle with the plaintiff, the case will proceed to trial. This trial will most likely involve a jury. For many companies, a jury represents an uncertain and potentially dangerous proposition.
The Trouble with Jury Trials
Prior to a jury trial, the judge decides what law applies and the jury, as the "trier of facts," is tasked with evaluating evidence based on the judge's instructions regarding the applicable law. The jury pool is composed of a cross section of individuals with different experiences and backgrounds.
While some citizens look forward to jury duty, others want nothing more than to be excused and sent home. Lawyers try to help their clients select a sympathetic jury through voir dire, a process where potential jurors respond to various questions. Nevertheless, there are a variety of problems for companies forced to defend themselves before a jury in employment law cases. Some examples:
Jurors' identities. You don't know exactly who the jurors will be until you show up for trial, possibly a year or more after the plaintiff files his or her complaint with the court. This issue exists in all types of cases and is not specific to employment litigation. Yet it is not a comforting proposition if you are managing risk for your company. If you had a clearer sense of the composition of the jury at the outset of the case, you would have a better chance of predicting early on how your case might be received. Without such information, it is more difficult to assess whether to settle early or "roll the dice" and go to trial. A company might choose to invest resources in jury consultants, jury research or focus groups to reduce these risks; however, such investments of time and money do not necessarily eliminate the problem. In addition, the company is less likely to invest resources in such trial preparation for single-plaintiff and single-defendant cases as compared to potential high exposure or "bet the company" litigation.
A jury of peers. Are jurors more likely to sympathize with an individual who is out of work and having trouble finding another job or with a company that they might perceive as having "deep pockets"? While all parties in litigation have a right to a jury of their peers, will the jurors selected for your company's case ultimately understand the business's perspective? Will their points of view include the difficulties of running such a business in a challenging economic environment and the need to have productive and reliable employees? Perhaps so, perhaps not. Judges are generally perceived to be less likely to be influenced by sympathy than juries.
Runaway damage awards. It is commonly recognized that there is a higher probability of a runaway damage award with a jury as compared to a case tried before a judge. It is not uncommon for a jury in a single-plaintiff and single-defendant employment case to award several hundred thousand dollars or even to render a multimillion-dollar verdict for a plaintiff who has sued his or her employer. This isn't to say that a judge or an appellate court cannot step in after the fact and knock a large punitive or exemplary damage award down, but why go there in the first place if you have the ability to do something now to try to avoid this result?
Right to a Jury Trial
The Seventh Amendment of the U.S. Constitution guarantees the right to a jury trial. Similarly, most state constitutions guarantee that right. Further, the federal Civil Rights Act of 1991, which amended Title VII of the Civil Rights Act of 1964, and the Americans with Disabilities Act of 1990 (ADA), specifically provide for jury trials in Title VII and ADA discrimination cases. However, this right is not absolute. A plaintiff has to timely and properly elect a trial by jury under the applicable court rules. For example, if the case is in federal court, under Rule 38(d) of the Federal Rules of Civil Procedure, "[a] party waives a jury trial unless its demand is properly served and filed." But even if a plaintiff attempts to timely and properly elect a jury trial, courts have held that an employee or an applicant for employment can independently waive federal and state constitutional rights to a jury trial under certain circumstances.
Jury Waivers' Enforceability
Jury waiver agreements in the commercial context, such as those used by banks, landlords and other institutional parties, have been routinely enforced by courts throughout the country as long as they are "knowing and voluntary." This includes jury waivers contained in routine loan documentation, mortgage notes and commercial leases. Likewise, there is case law supporting the proposition that jury waivers are enforceable in the employment context. This case law largely centers on the enforceability of pre-dispute jury waiver provisions contained in written employment agreements.
Courts generally respect a jury waiver if it is entered into on a knowing and voluntary basis.
For example, when confronted with this issue, federal judges in New York have enforced jury waiver language contained in employment agreements. In contrast, some state constitutions, such as those in California and Georgia, prohibit pre-dispute jury waivers, and courts in those jurisdictions have prohibited their use outside pre-dispute arbitration. In fact, the weight of authority throughout the country tends to center on the use of pre-dispute jury waivers contained in employment documentation when accompanied by agreements to arbitrate employment disputes. In this context, it is clear that such a jury waiver can be enforced.
Courts generally respect a jury waiver if it is entered into on a knowing and voluntary basis. In this regard, courts have looked at a variety of factors when evaluating whether a jury waiver satisfies this standard. One factor is whether the waiver language is clear and unambiguous.
Courts have examined whether a waiver is conspicuous. Waiver language hidden in the middle of a lengthy document and not prominent in any manner, either by virtue of typeface, heading or format, may be subject to challenge.
Likewise, courts may examine whether there is a significant disparity in the bargaining power between the parties entering into the jury waiver. As such, courts may consider whether the employee who signed the waiver is an experienced businessperson and was afforded an opportunity to review the agreement for a reasonable period of time or to negotiate the terms of the jury waiver, and whether the employee did so.
In this regard, courts might consider whether the employee had the right to opt out of the jury waiver agreement, but nevertheless voluntarily decided to enter into it. Further, courts have considered whether the employee was advised of the right to consult with a person of the employee's choosing, such as an attorney or other trusted advisor, prior to entering into the jury waiver and whether the employee actually engaged counsel for this purpose. In sum, the likelihood of enforcement of a jury waiver is contingent on a variety of factors and, therefore, cannot be guaranteed.
If your company conducts business in jurisdictions outside of California and Georgia, it should consider asking employees and applicants working in those jurisdictions to agree to a pre-dispute jury waiver. Conspicuous jury waiver language contained in an application form, offer letter, stand-alone jury waiver form or employee handbook may be enforceable given the proper circumstances. However, to the extent a jury waiver contained in any of these documents is unaccompanied by an arbitration agreement, this issue has not been widely litigated and there is a paucity of case law. As a result, there is some legal risk in this area.
Notwithstanding, in one case, a Pennsylvania court affirmed on appeal that the right to a jury trial can be waived and that an employer's use of a pre-dispute jury waiver agreement in the employment context did not contravene public policy. In that case, a new hire failed to sign and return a jury waiver form presented to him in the orientation materials he received at the outset of his at-will employment. His supervisor told him that it was a condition of employment and that if he failed to sign and return the jury waiver form, he would not be permitted to work at the company. The Pennsylvania court agreed with the employer in that case. (See Beach v. Burns International, 406 Pa. Super. 160, 593 A.D.2d 1285 (1991).)
Conceptually, unless otherwise prohibited by law, pre-dispute jury waivers obtained in the employment context should be enforced if they meet the knowing and voluntary standard described above. In fact, there is no intellectual reason why a waiver of the right to a jury trial in the employment context should be treated differently than any other waiver outside of the employment context. Taking it one step further, and as suggested in Beach, a jury waiver in the employment context that otherwise keeps disputes in court, with no modifications to the judicial process other than the use of a bench, rather than a jury trial, should be at least as enforceable, and perhaps more enforceable, than a jury waiver accompanied by an arbitration provision.
Your company executives would have to decide whether to obtain jury waivers on a "going forward" basis from applicants and whether to obtain them from current employees. Is it fair to ask long-term employees who did not consent to a jury waiver at the time they were hired to now sign such agreements? An organization must decide what makes the most sense based on company values, needs and culture.
If executives decide to ask current employees to sign jury waivers, there must be sufficient consideration to make the waivers enforceable. In some jurisdictions, such as New York and Colorado, continued at-will employment has been held to be sufficient consideration in the context of enforcing restrictive covenant agreements.
In other jurisdictions, employers must give current employees something more, such as a promotion, a pay increase, a beneficial change in compensation plan, as well as a monetary payment to which the employee would not otherwise be entitled. This is the case because you need to have sufficient consideration to make the agreement binding and enforceable, and the mere continuation of at-will employment is not deemed sufficient consideration in all jurisdictions. Enforceability is jurisdiction-specific, so be sure to understand the law in the jurisdictions where you do business and seek employment law counsel before your company tries to obtain a jury waiver from employees or applicants.
Whether your company asks employees to sign jury waivers or, instead, asks that they waive the right to use the court system altogether in favor of private arbitration is another question. The U.S. Supreme Court has squarely decided that statutory employment discrimination claims can be compelled to arbitration when employers and employees have entered into arbitration agreements. (See, for example, Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); Circuit City Stores v. Adams, 532 U.S. 105 (2001).) As a result, there is greater legal certainty in the employment context when it comes to the enforceability of an arbitration agreement as compared to a jury waiver unaccompanied by an arbitration provision.
Proponents of arbitration often cite the speed, private nature and finality of the dispute resolution venue. In addition, in light of a recent U.S. Supreme Court case law holding that class-action waivers contained in arbitration agreements may be enforceable, employers might find arbitration agreements containing class-action waiver language to be extremely beneficial for thwarting class-action litigation. (See AT&T Mobility LLC v. Conception, 113 S. Ct. 1740 (2011).) However, the National Labor Relations Board has held that requiring employees as a condition of employment to sign arbitration agreements waiving their right to bring class actions in any forum violates the National Labor Relations Act (D.R. Horton, 357 NLRB No. 184 (Jan. 3, 2012)).
Critics of arbitration question whether the process is any faster or less expensive than court proceedings.
If arbitration is not the answer for your company, one could argue that there is little downside to seeking a jury waiver as an alternative. Jury waivers preserve the entire process in court, except they seek to eliminate the jury as the fact-finder.
When permitted by law, consider asking applicants for employment and current employees to enter into jury waivers or, if more appropriate for your organization, arbitration agreements. You might just find that such agreements help the company achieve better results with or without a trial, including more favorable settlements.
Alternatively, your corporate leaders may be willing to take more cases to and through trial knowing that a judge or an arbitrator, rather than a jury, will be the ultimate trier of fact. In any event, you should be the judge as to what works best for your organization—by making an informed decision on this sometimes overlooked but critical matter—before someone else, such as a disgruntled former employee or his or her attorney, makes the decision for you.
The author is a partner in the New York office of Jackson Lewis LLP. He represents management exclusively in workplace law and related litigation.