Federal court upholds ‘clickwrap’ agreement in employment lawsuit

NEWSWIRE: Jan. 10, 2017.

DATELINE: Trenton, N.J.

A federal court in New Jersey has upheld so-called “clickwrap” employment agreements in a case involving two employees who violated covenants in theirs.

In the case, two former employees of ADP, the human resources and payroll processing firm, were sued by their former employer after accepting a job with a competitor.

ADP said the two had agreed to several restrictive covenants when joining the company’s stock award program, including non-compete, non-solicitation, non-disclosure and forum selection clauses. A forum selection clause is where a party agrees that litigation will be resolved either in a particular jurisdiction or by a particular means such as arbitration.

The employees contested the civil lawsuit on the grounds that their agreement to the terms came in the form of a “clickwrap”; that is, they checked a box asking if they had read several electronic documents (containing the restrictions) without actually forcing the employees to read them. The employees also disputed that checking that box agreed to the terms of the agreement. They contended it meant only that they had read them.

The United States District Court for the District of New Jersey ruled that the clickwrap agreement was enforceable and denied the employees’ motion to dismiss the case. The court also granted ADP a preliminary injunction restricting the employees’ work with their new company.

Lexology notes the crossover with clickwrap agreements commonly used in consumer markets (such as terms of use, or end-user licensing agreements) now being used in employee programs. However, it remains to be seen whether a court would find these agreements enforceable in a case where an employee is not provided with significant benefits, such as stock awards.

The case is ADP v. Lynch, No 16-1053 (2016).

Read the full article here.