The U.S. Court of Appeals for the Sixth Circuit has ruled that an arbitration provision in a plaintiff’s employment contract is binding and enforceable, even if the employer did not explain the provision or recommend the employee seek legal advice. In Gavette v. United Wholesale Mortgage, LLC, the appellate court confirmed once again that employees are subject to arbitration provisions to which they sign their name, regardless of their employer’s explanation of the terms—or lack thereof. Employers need not explain the provision or agreement, nor must they suggest or recommend the employee consult an attorney. In other words, an employee is held responsible for their own decisions and signature on a document that includes an arbitration provision.

Gavette sued his former employer in federal court, alleging wrongful termination and violations of state and federal disabilities laws. But he had signed an employment contract containing an arbitration provision. He didn’t dispute his electronic signature. While he argued that “he does not remember signing an arbitration clause,” the Sixth Circuit concluded the following:

In the end, whether [Plaintiff] read the Agreement, understood the meaning of its arbitration clause, or received legal assistance from his employer is irrelevant. In Michigan, “one who signs a contract will not be heard to say, when enforcement is sought, that he did not read it, or that he supposed it was different in its terms.” . . . To the same end, [Plaintiff’s] failure to understand the contract’s terms constitutes “negligence which estops him from voiding the instrument on the ground that he was ignorant of its contents, in the absence of circumstances fairly excusing his failure to inform himself.”

Indeed, “Michigan law presumes that parties have read what they have signed, . . . and nothing indicates that parties need to affirmatively supplement signed contracts with evidence of their presentation before seeking enforcement,” as Judge Readler explained, writing for the panel of three appellate judges.

The bottom line was that the plaintiff assented to the agreement, and thus was bound by it.

What does this mean for employers?

Employers are not required to explain contract terms to their employees, although employees are allowed to ask questions and/or seek advice from their own independent counsel. If an employee in Michigan complains that an arbitration term is not enforceable because it was not explained, or because they were not told to have a lawyer review it, the employer or human resources team should contact their labor and employment counsel right away. However, rest assured that under those circumstances, the employee is not correct, and the arbitration clause is, nevertheless, binding and enforceable.

Employment contracts and arbitration provisions are, still, particular and nuanced legal documents. An arbitration provision should be plain and obvious, and an employee must affirmatively assent to those terms for them to be enforceable, even in light of this recent ruling. They also should be signed by the parties, and not hidden away in employee handbooks, especially not in a handbook with the typical disclaimer that it is not a contract.