Fox vs Ailes: How Would Your Employment Agreement Stand Up?

{3:30 minutes to read} In one of the more high-profile, recent harassment claims, former Fox News Network anchor Gretchen Carlson filed a complaint in Bergen County Superior Court in New Jersey against former FOX news CEO, Roger Ailes, alleging that her employment was adversely affected and ultimately terminated because she had rebuffed Ailes’ sexual advances.

Although Carlson was terminated by Fox News, she did not sue Fox News Network but instead named Ailes as the sole defendant. She alleges that Ailes’ conduct was “performed in his individual capacity” and “was outside the scope of his authority, employment, and agency at Fox News.”

Counsel for Ailes subsequently filed a motion to remove the matter to federal court, alleging that Ms. Carlson’s employment agreement stipulated that any dispute about her employment must be settled in arbitration, and any filings, documents and testimonies relative to the arbitration were to be held in “strict confidence.” He also alleged Carlson must be bound by the agreement’s statement that any disputes “shall be governed according to the laws of the State of New York without regard to conflict of law principles.”

Carlson claims the terms of the agreement are not dispositive of her claim, as she signed the agreement with Fox News Network and not Ailes. Ailes’ lawyers allege the contract is an agreement because “any controversy, claim or dispute” arising out of her employment must be determined by arbitration.

The significance of this dispute goes beyond whether the matter is to be determined by an arbitration or a trial by jury, which Carlson demanded in her complaint. If the New Jersey court were to be considered the proper forum, the employment agreement may be ruled unenforceable as New Jersey law requires that arbitration agreements in employment or consumer contracts explicitly require a statement that the signer is giving up the right to a jury trial. That provision was not contained in the contract.

Although the motion has not yet been decided, the facts of this case present some food for thought for employers who use employment agreements.

1. Make sure that the agreement does contain a statement acknowledging waiver of a jury trial.

2. Consider expanding the definition of the employer to include the employer’s officers and directors, although this may be a double-edged sword if there is a bona fide issue as to whether an individual is, in fact, acting within the scope of their authority and employer at the time the alleged act was committed.

This is a question for which employers should seek the input of their counsel as well as their employment practices liability insurance carrier.