Mandatory Arbitration (Puerto Rico)
By: Angel Berberena, Esq.
November 22, 2021
The Supreme Court of Puerto Rico recently issued an opinion in Aponte Valentín v. Pfizer Pharmaceuticals, 2021 TSPR 185 (the “Opinion”), that validates mandatory arbitration provisions in the workplace where consent and consideration is given merely by the employee’s continued employment.
In May 2016, Pfizer provided by email an arbitration agreement under the Federal Arbitration Act (“FAA”) to its workforce in Puerto Rico. As per the agreement, the employees would be subject to mandatory arbitration as a condition of employment and/or continued employment. The mandatory arbitration included contractual claims, wrongful termination, discrimination, harassment, retaliation, wage and hours, leaves, and others. Under the agreement, if a new employee worked for 60 days, or if an existing employee continued to work for 60 days after receiving the agreement, their continued employment would be considered consent to the agreement.
A group of employees filed suit in the Puerto Rico Court of First Instance alleging wrongful termination after a transfer to another entity. The case eventually made its way to the Supreme Court of Puerto Rico. The Supreme Court ruled that the mandatory arbitration agreement was valid; and adopted or made the following findings:
- A mandatory arbitration agreement needs to be in writing.
- By agreeing to arbitrate a statutory claim, a party does not forgo the substantive right afforded by the statute; it only submits to the resolution in an arbitral rather than a judicial forum.
- But for a few exceptions, the FAA is extensive to transactions in interstate commerce and as a rule will prevail over conflicting state provisions against arbitration under the Supremacy Clause.
- The FAA does not require the execution of a formal arbitration agreement to be valid and depending on the language in the agreement, the continued employment may provide tacit consent.
- Those who continued working after the 60 days provided in the agreement gave the necessary consent and claimants are now estopped from challenging their consent to the agreement.
- The fact that a mandatory arbitration agreement may be an adhesion contract (a contract usually drafted by one party with stronger bargaining power) is insufficient to challenge these findings.
The Opinion makes it easier for employers in Puerto Rico to establish mandatory arbitration agreements under the FAA, even for current workers, without the need to obtain express or written consent or additional consideration to that provided by their continued employment.
The Court did not explain how an employee may effectively object to the agreement while retaining his job or whether an explicit objection by the employee is grounds for termination. In case of a termination or adverse employment action because of the employee’s objection to the agreement, and depending on the circumstances, the employer could face claims based on the unilateral change to the employment agreement or lack of just cause for termination. None of these issues were addressed by the Supreme Court in the Opinion.
Goldman Antonetti & Córdova, LLC stands ready to assist you and your business to adjust to Puerto Rico’s regulatory and legal changes. If you need further assistance in this area, please contact any of the following members of our Firm:
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