One size doesn’t fit all when it comes to contracts

Many employers download “standard” employment agreements from internet resources to use in their employee on-boarding process.  In fact, some payroll service providers provide subscriptions to online forms collections as a value add to their payroll services.

These agreements can lead to trouble if not carefully tailored to local law and practice.  Two current disputes involve a Buffalo, New York Wendy’s franchisee and a Applebee’s franchise in St. Paul, Minnesota whose employment agreements each contained a standard arbitration clause.  While these are fairly standard clauses in commercial contracts, in the employment context, such clauses are illegal waivers of class action and collective rights according to the National Labor Relations Board.  The Buffalo franchisee, Great Lakes Restaurant Management, LLC continues to argue that a 2003 court decision in another Federal Circuit finding arbitration clauses acceptable should be applied in the Second Circuit where New York is located.  Further, the Federal Arbitration Act applies requiring enforcement of the clause.  The outcome is uncertain but the case required significant legal defense by the employer, not helping the bottom line.

This case is a good example of how seemingly standard contract provisions in downloaded forms can result in unforeseen consequences down the road.  One size doesn’t fit all.

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