Arbitration agreements in employment relationships frequently work to protect the employer from extended litigation of employment disputes or any other issues arising from an employment relationship.  However, in Minnesota there has been little discussion about what protection they might offer employees who commit tortious acts against fellow employees or independent contractors.  The concept of arbitration agreements covering employees was discussed in a the Eighth Circuit’s recent decision of Anderson v. Hansen.  For those reading, this case includes details related to a sexual assault, so those who have difficulty with those situations may want to skip this week’s update.

In this case, the plaintiff, Anderson, was an independent contractor for AFLAC who attended an AFLAC work conference in 2018, which the defendant, Hansen, also attended.  At the end of the first day, which included dinner and drinks at a bar, Anderson returned to her room.  According to the decision, shortly after, Hansen forced his way into Anderson’s hotel room and raped her.

Anderson first sued AFLAC for a number of torts, and quickly settled.  Afterward, Anderson brought several tort claims against Anderson for battery, assault, false imprisonment and loss of consortium.  Citing AFLAC’s arbitration agreement with Anderson, Hansen sought to move the case to arbitration.  The agreement between Anderson and AFLAC stated the following:

[T]he parties agree that any dispute arising under or related in any way to this Agreement (“Dispute”), to the maximum extent allowed under the Federal Arbitration Act (“FAA”), shall be subject to mandatory and binding arbitration, including any Dispute arising under federal, state or local laws, statutes or ordinances…or arising under federal or state common law….It is further agreed that, in any Dispute between the parties, all past and present officers, stockholders, employees, associates, coordinators, agents and brokers of Aflac, who are alleged to be liable or may be liable in any manner to either party based upon the same allegations made against a party to this Agreement, are intended to be third-party beneficiaries of this Arbitration Agreement with full rights  to  enforce  it.  Associate also understands and agrees that, regardless of whether Aflac is a party, this Arbitration Agreement shall be applicable to any dispute between Associate and any past and present officers, stockholders, employees, associates, coordinators, agents and brokers of Aflac.

The district court denied Hansen’s motion on the basis that the claims were not arising under or related in any way to Anderson’s agreement with AFLAC.  Hansen appealed.

In its decision upholding the district court’s denial, the Eighth Circuit first cited the precedent that courts should “liberally construe a valid arbitration clause,” and noted that the clause in this instance governed “any dispute arising under or related in any way” to the Andersons’ agreement with AFLAC.  The court then analyzed additional decisions from other circuits where sexual assault occurred during the course of an employment relationship.  It found that the phrase “arising under” “requires the existence of some direct relationship between the dispute and the performance of duties specified by the contract.”  It held that in order for the plaintiff’s case to fall under the arbitration clause of the agreement, the “underlying factual allegations of sexual assault must have some ‘direct relationship’ with the Andersons’” agreement to be arbitrable, and that the claims in this case did not.  The court found that Hansen could have engaged in the conduct in the absence of any contractual or employment relationship between AFLAC and the Andersons, and the district court’s decision was upheld.

While this decision concerns a suit against a co-worker, it 100% could impact employers who attempt to enforce arbitration provisions with employers and/or independent contractors.  Arbitration provisions are to be liberally construed, and the language of this agreement was broad, according to the court.  If you are seeking to enforce an arbitration provision against your employees, the language of that provision must be such that it is enforceable in any foreseeable situation that could arise in an employment relationship.  Employers will never be completely insulated from being forced to defend themselves in court, but it is important to have language that can protect you if you are seeking to avoid a courtroom.  If you, or your organization, need assistance crafting arbitration language that will be upheld in court, contact Wiley Reber Law, for legal advice that works.