Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Is It Time to Update Your Employee Handbook? Conflicting Provisions Can Spell Doom in Litigation

Author: Donald M. Pepe

Date: January 22, 2014

Key Contacts

Back

As highlighted in a recent federal court decision, New Jersey employers should review their employee handbooks carefully to ensure that none of the provisions conflict.

One company learned this lesson the hard way when attempting to enforce an arbitration clause against a former employee alleging discrimination.

While the handbook required employees to submit employment-related claims to arbitration, it also stated that the handbook did not create any terms or conditions of employment and that the employer could modify the terms at any time. Given the apparent conflict, the court refused to compel arbitration.

The Facts of the Case

Raymours Furniture Company v. Rossi involved claims of retaliation, discrimination, and constructive-discharge filed by Sandra Rossi against her employer, Raymours Furniture Company. The primary question before the court was whether there was an enforceable arbitration agreement between the parties.

In 2012, the employer amended its employee handbook to implement an Arbitration Program, which required employees to submit to final and binding arbitration any and all employment-related claims. The language of the Arbitration Program provides, “This Program is an essential element of your continued employment relationship with Raymour & Flanigan and is a condition of your employment.” Rossi acknowledged receipt and review of the updated handbook.

After receiving notice of Rossi’s suit, Raymours sought to compel arbitration based on the handbook provision.

The Court’s Decision

Under New Jersey law, an arbitration agreement “must reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim. Generally, [the court] determine[s] a written agreement’s validity by considering the intentions of the parties as reflected in the four corners of the written instrument.” Reading the handbook as a whole, the court concluded that there was no enforceable arbitration agreement between the parties in this case.

As explained by the court, “the Handbook here contains provisions that are confusing and contradictory. Plaintiff on the first page of the Handbook disclaims any intent to be bound by the provisions therein, then over 50 pages later identifies a provision it now intends to be enforceable as an arbitration agreement.”

Page one of the handbook clearly stated: “Nothing in this Handbook, or any other Company practice or communication or document, including benefit plan descriptions, creates a promise of continued employment, employment contract, term or obligation of any kind on the part of the Company.”

The court also rejected the argument that the specific provisions regarding arbitration should trump the handbook’s general at-will disclaimer. “None of the communications from Plaintiff to Defendant ensured she understood that the Arbitration Program was distinct from the non-binding provisions of the Handbook,” the court stated.

Finally, the court also found that the Arbitration Program was unenforceable for lack of mutuality of obligation, noting that the first page of the handbook also states that “Raymour & Flanigan reserves the right to change or modify Company rules, policies, practices and procedures, as well as the contents of this Handbook at any time with or without advance notice and at its sole discretion.”

As explained by the court, “[it] will not compel arbitration based on a provision Plaintiff may invoke, modify, or ignore at its sole discretion without notice to and agreement by Defendant.”

The Message for New Jersey Employers

The court’s decision makes it clear that employers can’t have it both ways, meaning that handbooks cannot contain language seeking to bind employees to certain obligations, while also reserving the right for the employer not to be held accountable by the handbook’s terms. Should businesses seek to require employees to submit to arbitration or establish another condition of employment, they must do so via an enforceable agreement.

If you have any questions about this case or would like to discuss your company’s employee handbook, please contact me, Donald Pepe, or the Scarinci Hollenbeck attorney with whom you work. 

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities post image

The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities

On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]

Author: Dan Brecher

Link to post with title - "The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities"
Common Legal Mistakes NYC and New Jersey Business Owners Make post image

Common Legal Mistakes NYC and New Jersey Business Owners Make

Operating a business in the New Jersey and New York City metropolitan region offers incredible opportunities, but it also requires navigating a dense and highly regulated legal environment. From entity formation to regulatory compliance, seemingly minor legal oversights can expose business owners to significant risk. In our work with businesses throughout the region, our attorneys […]

Author: Dan Brecher

Link to post with title - "Common Legal Mistakes NYC and New Jersey Business Owners Make"
What Founders Can Learn From Start-up Suits post image

What Founders Can Learn From Start-up Suits

High-profile founder litigation is more than just a media spectacle. For startup founders, these cases underscore the legal and structural risks that can arise when rapid growth outpaces formal oversight. While launching a new company can be both an exciting and deeply rewarding endeavor, founders must be mindful that it also comes with significant risks. […]

Author: Dan Brecher

Link to post with title - "What Founders Can Learn From Start-up Suits"
Corporate Governance Reviews: A Practical Guide for New Jersey Companies post image

Corporate Governance Reviews: A Practical Guide for New Jersey Companies

Every New Jersey company should periodically evaluate its governance framework. Strong corporate governance protects directors and officers, builds investor confidence, reduces litigation exposure, and positions a company for sustainable growth. The first quarter of the year is a great time to evaluate your corporate governance practices and perform any routine maintenance needed to keep that […]

Author: Ken Hollenbeck

Link to post with title - "Corporate Governance Reviews: A Practical Guide for New Jersey Companies"
What to Do After Being Served with a Lawsuit: Steps to Protect Your Legal Rights post image

What to Do After Being Served with a Lawsuit: Steps to Protect Your Legal Rights

Being served with a lawsuit is one of the most stressful legal events a business or individual can face. Whether the claim involves a contract dispute, an employment matter, an intellectual property issue, or another legal challenge, the actions you take in the first few days can significantly shape the outcome of your case. Acting […]

Author: Robert E. Levy

Link to post with title - "What to Do After Being Served with a Lawsuit: Steps to Protect Your Legal Rights"
Will 2026 Be a Banner Year for SPACs? Understanding the Risks and Opportunities post image

Will 2026 Be a Banner Year for SPACs? Understanding the Risks and Opportunities

Special Purpose Acquisition Companies (SPACs) continue to gain momentum as we move through 2026. After enduring a significant contraction following the 2021 boom and the regulatory scrutiny that followed, SPAC activity rebounded sharply in 2025 and now carries forward into 2026 with real momentum. The SPAC resurgence reflects broader improvements in both market conditions and the […]

Author: Dan Brecher

Link to post with title - "Will 2026 Be a Banner Year for SPACs? Understanding the Risks and Opportunities"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!