A Capehart Scatchard Blog

One Click Can Seal The Deal

By on April 4, 2017 in Court Rulings with 0 Comments

A popular argument that employees make regarding employer/employee agreements is that the employee should not be held to the terms of the agreement because the employee signed the agreement without actually reading the terms.  In a different twist, two employees claimed in a February 2017 case before the Third Circuit Court of Appeals, ADP, LLC v. Lynch, No. 16-3617, 2017 U.S. App. LEXIS 2159 (3d Cir. Feb. 7, 2017), that they were provided with a non-compete agreement by their employer, that they read the agreement but that they should not be held to the terms of the agreement because the employee never explicitly signed off on the requirement to comply with the agreement.  Instead, the employees clicked a button on a web page that only indicated that they had read the agreement.  The Court ultimately held that even though the employees only signed off on the fact that they had read the non-compete agreement, the agreement to comply was implied by the terms of the actual documents.

The Facts of the Case

Jordan Lynch and John Halpin worked as sales employees of ADP for six years before resigning to join ADP’s direct competitor, Ultimate Software Group. On five different occasions, both employees accepted incentive stock awards that were offered to certain employees based upon performance. To accept the stock incentives, the employees had to log on to a certain website containing award documents. The webpage stated that the employee must select the checkbox to indicate that he/she has read all associated documents before he/she can proceed. Next to the check box was a link to various documents, including an award document and a non-compete agreement. The first page of the award document stated that the acceptance of the award was conditioned upon acceptance of the non-compete agreement. The first page of the non-compete agreement reiterated this requirement and provided that for a period of 12 months after employment ended, the employee would not join an ADT competitor and would not solicit any business from current or prospective clients.

After the Lynch and Halpin resigned, ADP sued the employees claiming that they were soliciting current and prospective ADP clients and requested preliminary injunctive relief to enforce the non-compete agreement. The court granted the preliminary injunction in part.  The employees filed for reconsideration, which was denied.  The employees appealed.

The employees argued, on appeal, that they were never required to check a box on the webpage that said that they read and agreed to the terms of the documents.  Instead, the employees checked a box that stated that they had only read the documents. The Court rejected the employees’ argument. Even though the actual box that the employees clicked only stated that they had read the documents, the documents themselves explicitly advised that agreement with the non-compete agreement was a condition of accepting the stock award. Moreover, after checking the box that said that they had read the documents, the employees also clicked the “Accept Grant” button and entered their personal passwords. The employees were ultimately found to be bound by the employer’s non-compete agreements.

What Does this Mean?

This is a positive case for employers. It enforces the fact that as long as an underlying employment agreement states that the employees must abide by it, when the employee signs off that he/she has read the agreement, that employee is presumed to understand and consent to the terms of the agreement.



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