Fired employee wins arbitration award despite at-will status

Employers using agreements that require employees to arbitrate employment law claims should take note of a troubling decision by the U.S. 4th Circuit Court of Appeals (the federal appellate court with jurisdiction over North Carolina).

Facts and findings

James Warfield, a securities broker, contended before an arbitration panel that his former employer, ICON Advisers, Inc., and a related corporation, ICON Distributors, Inc., (together, ICON) wrongfully terminated him without just cause. The panel awarded him $1,186,975. He asked the U.S. District Court for the Western District of North Carolina to enforce the award. ICON asked the court to vacate it.

The district court refused to enforce the award, holding North Carolina is an at-will employment state that doesn’t recognize a claim for wrongful termination without just cause. The court determined the arbitrators manifestly disregarded the law in finding to the contrary and vacated the award on that basis.

Warfield appealed to the 4th Circuit. The appeals court ruled that because ICON hadn’t made the exceedingly difficult showing necessary to prove the arbitrators acted with manifest disregard of the law, it had to reverse the district court's order and enforce the arbitration award.

Origins of claim