Is a firm required to arbitrate disputes arising after the expiration of employment contract?

Question

Suppose an employee is hired by a firm for a period of one year. After the first year the employee may continue working for the company, until terminated, as an at will employee (For simplicity, let’s assume the contract explicitly contains a starting and ending date so there is no ambiguity as to the expiration of the contract).

The contract also specifies under what circumstances the employee maybe terminated and a specific protocol the company must follow to terminate the employee (for example, giving a certain number of days advance notice). Contract also contains a binding arbitration provision.

Suppose the employee continues working for the firm for another 3 years after the initial one year term ends.

After four years, the firm fires the employee. The employee argues that the company did not follow the termination protocol outlined in the contract and wishes to compel arbitration whereas the firm wishes to litigate the case in court.

The firm argues that it is no longer bound to arbitration since the contract (which contains the arbitration clause) was only binding during the first year and has thus expired.

Although the employee agrees that the contract expired in a general sense he argues that the part of the contract that governs how the employee must be terminated is still governed by the contract. Although the employee acknowledges that the general agreement to arbitrate no longer exists (for example, if the employee sustains an injury on the job after the first year the employee would agree that the firm is not bound to arbitration) since the termination protocol clearly arise from the contract, the employee argues, the firm is still bound to arbitrate this specific dispute.

What case precedent can be applied to this case (especially in NJ)?

Is a firm required to arbitrate disputes arising after a contract expires if the contract specifically contains provisions that govern the phase of the employment after it expires?

Note: The above scenario hypothetical. It is only intended to help illustrate the essence of the question.

Answer 1

Is a firm required to arbitrate disputes arising after the expiration of employment contract?

The wording of this question is problematic. From your description it is doubtful that the contract truly expired at the end of the first year. It is valid for a contract to encompass multiple phases with different provisions specific to each phase.

Providing that "[a]fter the first year the employee may continue working for the company, until terminated, as an at will employee" is different from expiration of the contract at the end of the first year. The contract simply outlined what happens before and after that point in time. The employer's allegation that the contract expired at the end of the first year is inconsistent with outlining in that same contract the nature of the parties' continued relation after the first year. Said nature of the employment relation should have been outlined in a separate contract in order to preempt an interpretation of there being one same/ongoing contract.

The employer's allegation is vague and untenable also in a scenario where the employer terminates the employee within the first year. The employer's allegation seemingly implies that the employee's deadline for arbitration proceedings expires at the end of the first year. That would give the employer the opportunity to evade the arbitration clause by choosing a timing that de facto prevents its employee from enforcing the clause.

Questions regarding arbitration are unanswerable without knowing the exact terms of the relevant clause(s). Just like the contract provides a transition from fixed term employment to at will employment, it is possible --but not necessarily the case-- that the arbitration provision is applicable only to some of the phases that the contract encompasses.