On-line Job Applications Can Create Issues of Lack of Agreement to Onerous Terms

A recent development is the shift of employers to the use of online job applications.  Another relatively recent development is the use of job applications with provisions intended to preserve an increasing list of management rights.  Recent case law suggests limitations on the binding nature of onerous terms on applications that limit otherwise applicable employee rights.

Perhaps the most long-standing employer effort to maintain its management rights pertains to the use of "at-will" employment terms on a job application, in which the applicant understands and agrees that an employer has the right to terminate an employee at-will, at any time, and for any reason.  The second management right often written into job applications is that employer policies are subject to change at any time, at the discretion of the company, and sometimes indicating that not even notice to the employee is required.  More recently, a litany of other terms are often added to applications. 

Today, a majority of employees are subject to some type of individual arbitration agreement, often included in the job application.  These arbitration terms require employees to bring any legal claim regarding employment through an arbitration process set up by the company, as opposed to going to court.  One benefit to such agreements is that, under applicable law, they can require the employee to bring only individual claims, and to waive class or collective actions involving others.  A still more recent trend is the inclusion of provisions on a job application such as waiver of jury trial rights, and sometimes agreement to shorter statutes of limitations to bring a claim than would otherwise be applicable.  

With all these type terms included on job applications, on-line applications create special issues as to whether there is "agreement" on such terms or to make them binding.  Further, whether there is such a contractual-type "agreement" on such terms usually depends upon the law of the state in which the issue arises.  The states vary somewhat in the treatment of whether a document constitutes an agreed-upon "contract."

The issue becomes complicated with on-line applications because of the varying use of on-line terms with a click of "I Accept," or something of that nature, and courts are increasingly sensitive to such issues in response to arguments that almost no one reads the on-line terms.  A recent ruling from the federal Fourth Circuit Court of Appeals points out the limitation of on-line applications reaching a contractually binding arbitration agreement.  Marshall v. Georgetown Memorial Hospital, No. 22-02010 (4th Cir., 8/13/24).  

The on-line application in question was presented to employees without the arbitration agreement being visible on the screen the applicant initially saw.  Applicants could submit the application by checking a box at the top of the screen but would have had to pull down the screen to see the arbitration agreement at the bottom of the application.  The court concluded that an applicant is not obligated to scroll down to view and thus agree to an arbitration agreement in these circumstances.  The court rejected the employer's argument that the applicant should be considered to have agreed with the promise to arbitrate because the applicant could have scrolled down to view it at the bottom of the application.  The court indicated that there was no reason to assume an on-line user will scroll to subsequent screens when they can complete their business on one screen.  

The court pointed out that on-line applications are different from physical contracts, as terms are hard to miss on a physical contract so there is a duty to read the whole document.  In contrast, an applicant may not realize there are contract terms submerged elsewhere or in hyperlinks.  The court also pointed out the distinction between buttons or boxes labeled "I Accept" or "I Agree" than those marked "Submit."   An on-line user's agreeing to contract terms by checking a box or clicking a button must be clearly indicated.  

The bottom line in these type cases is that, in order to create a contractually binding waiver of rights by the applicant, it may require a formation of contract under applicable state law.  Employers relying on on-line applications to limit employee rights must insure the on-line applications meet applicable state requirements.  In general, such requirements include an obligation to provide reasonable notice to the applicant of employment terms in question and indicating that the applicant accepts those terms.  A Massachusetts appeals court is currently dealing with a similar issue, where on-line contracts are subject to a two-prong test to determine whether they are enforceable.  They must  give the signor reasonable notice of the terms, and obtain a reasonable manifestation of consent to those terms.  The applicant checked several boxes in the "New Hire Policy Acknowledgment Form," indicating he had read eight different company policies, including the arbitration agreement.  The court suggested that one way to do this would be to force applicants to scroll through the terms before they signed them, and the fact pattern that also involved the issue that the company has users check boxes next to each individual policy.  Longobardi v. Gulfstream Aerospace Servs. Corp., Mass. App. Ct. No. 2023-P-1096, Oral Argument 9/2/24.

There is some overlap between this issue and the issue of whether such contract terms are so onerous as to "shock the conscience" of the court, often called "unconscionable" terms.  In other words, there must also be a degree of fairness in the employer's issuing of the binding employment terms to make such terms enforceable.

This article is part of our October 2024 Newsletter. 

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