Illinois Appellate Court Holds that Arbitration Clause in Employment Contract is Valid and Enforceable

On June 9, 2014, the Illinois Appellate Court, First District, held that an arbitration clause contained in an employment contract is valid and enforceable. Fuqua v. SVOX AG, 2014 IL App (1st) 131429. The arbitration clause stated that arbitration is the exclusive remedy for, "[a]ny dispute or controversy arising under or in connection with this Agreement or any other dispute concerning [employee's] employment with [employer]." However, the clause carved out an exception for restrictive covenants and confidentiality provisions, which could be enforced in court. The Appellate Court stated that the Illinois Uniform Arbitration Act (710 ILCS 5/1) is controlling, which applies contract law to arbitration agreements. The Appellate Court found that the arbitration clause is supported by the offer of employment, acceptance of the offer, and consideration--the employment (which lasted only 8 months). The Appellate Court also found that there are no grounds for revocation of the arbitration clause because it is not procedurally or substantively unconscionable. The employment law claims subject to the arbitration clause in Fuqua include breach of contract and retaliatory discharge, as well as alleged violations of the Illinois Wage Payment and Collection Act, the Illinois Whistleblower Act, and the Illinois Personnel Record Review Act.

Illinois employers should take note of this decision because it essentially permits an employer to relegate a wide range of employment law claims to arbitration, but still reserve the right to enforce its restrictive covenants and confidentiality agreements in court.