Silence Is No Assent: Redefining Acceptance in Employment Arbitration Agreements

Introduction

The decision in Nicole Lampo, Petitioner, v. Amedisys Holding, LLC, and Leisa Victoria Neasbitt, Respondents by the Supreme Court of South Carolina establishes a significant legal precedent regarding the formation of arbitration agreements between employers and employees. The case centers on whether an employee’s continuation of work without actively opting out of an arbitration program can constitute acceptance of the arbitration agreement. Nicole Lampo, a physical therapist hired by Amedisys, received an electronic notice outlining a mandatory review of the arbitration agreement accompanied by an opt‐out provision. The key issue is whether Lampo’s failure to opt out and her continued performance of her existing employment duties amount to a “manifestation of assent” necessary to bind her to the new arbitration terms.

Summary of the Judgment

The Court held that no valid arbitration agreement was formed because Nicole Lampo did not manifest her assent to the disputed arbitration terms. Although Amedisys argued that Lampo’s continued employment following receipt of an email notice—containing instructions to either accept by “acknowledgment” or opt out—was sufficient acceptance, the Court clarified that mere silence and inaction under the circumstances did not indicate a willingness to modify the original employment contract. The Court reversed the decision of the Court of Appeals and remanded the case for further proceedings on the grounds that Lampo’s conduct did not satisfy the legal requirements for acceptance. The dissent, however, argued that the unilateral nature of the offer and the employee’s performance implied acceptance. Ultimately, the majority decision reinforces that acceptance must be an affirmative manifestation of assent, not a byproduct of inaction.

Analysis

Precedents Cited

The Judgment relies on longstanding contract law principles. Among the key precedents are:

Munoz v. Green Tree Fin. Corp.: This case sets forth the basic elements required for the formation of any contract—namely, an offer, acceptance, and consideration.
Sauner v. Pub. Serv. Auth. of S.C.: This decision further refines the need for mutual exchange and consideration in forming a valid contract.
Wilson v. Willis: This case is cited to emphasize that to compel arbitration, a valid contract must be formed with clear acceptance of the arbitration clause.
Electro-Lab of Aiken, Inc. v. Sharp Constr. Co.: This case provided the conceptual framework that an “acceptance” of an offer calls for a clear manifestation of assent, a point that is central to the majority’s determination.
Prescott v. Farmers Telephone Cooperative, Inc.: Although Amedisys cited this case to support the notion of a unilateral contract formed by performance under an offer, the majority distinguishes it by explaining that the facts in Prescott pertain to entering into an employment contract rather than modifying its terms.

These precedents collectively reinforce the traditional contract requirements. The majority opinion underscores that an arbitration agreement, as a bilateral contract, necessitates a clear indication of acceptance on both sides.

Legal Reasoning

The Court’s decision is firmly anchored in the principles of contract formation. To validly form a contract, three elements must be present: a clear offer, unequivocal acceptance, and consideration. Amedisys argued that by failing to opt out of the arbitration program and continuing to work, Lampo implicitly accepted the revised terms. However, the Court ruled that:

Offer: The August 6, 2013 email with its accompanying Dispute Resolution Agreement clearly communicated the offer to enter into an arbitration agreement.
Acceptance: Acceptance in contract law must be a manifestation of assent. The Court found that Lampo’s mere inaction—the continuation of work under the prevailing employment conditions—was insufficient to demonstrate an unequivocal acceptance of the new arbitration terms. This is because her continued performance was pursuant to her original employment contract that did not contain an arbitration provision.
Consideration: The judgment clarifies that while consideration is essential, it is only addressed after establishing that there is an affirmative acceptance. Here, even if continued employment might be seen as executed performance under a unilateral contract, it was insufficient since no new mutual promises were invoked.

Furthermore, the Court identified that reliance on the opt-out mechanism to imply acceptance would risk allowing employers to unilaterally modify terms without meaningful employee consent. By rejecting the “silence implies acceptance” argument, the Court adheres to black-letter principles aimed at protecting contractual fairness.

Impact on Future Cases and the Relevant Area of Law

This ruling is expected to have substantial implications in employment and arbitration law. Some potential impacts include:

Clarifying Employee Consent: Employers must now obtain clear and affirmative consent when modifying contractual relationships, rather than relying on passive employee inaction.
Limiting Unilateral Changes: The decision curtails the power of employers from imposing new arbitration agreements or other contractual changes via blanket opt-out procedures. This ensures that employees are not inadvertently bound by terms they have not actively agreed to.
Ensuring Contractual Fairness: By reinforcing that silence does not constitute acceptance, the ruling protects employees from potentially coercive modifications to the terms of their employment.
Guidance for Future Litigation: Future cases involving similar opt-out procedures will likely reference this case as a precedent, requiring a demonstration of affirmative assent for any contract modification.

Complex Concepts Simplified

Some of the complex legal concepts addressed in this case can be understood as follows:

Contract Formation: For a contract to be legally binding, one party must make an offer, the other must accept it, and both must provide something of value (consideration). In this case, while the offer was clear, acceptance was not because mere silence is not enough.
Bilateral vs. Unilateral Contracts: A bilateral contract arises when both parties exchange mutual promises. A unilateral contract is one where one party’s promise is accepted through performance. The Court ruled that an arbitration agreement is inherently bilateral. It requires an active sign of assent, and a party’s mere performance (if that performance is rooted in an existing contract) does not constitute acceptance of new terms.
Silence as Acceptance: Generally, silence or inaction does not signify agreement unless there is a prior understanding or a specific scenario that justifies that inference. Here, the Court rejected the idea that continuing to work equates to an opt-in.

Conclusion

The Supreme Court of South Carolina’s ruling in this case sets an important precedent in employment and contract law. By holding that an employee’s silence and continued performance without expressly opting out does not amount to acceptance of new arbitration terms, the Court reinforces a fundamental tenet of contract formation—there must be a clear manifestation of assent. Employers must now ensure that any modifications to existing contracts are accepted through more than mere inaction. This decision not only provides clarity regarding the boundaries of contract acceptance but also protects employees from unilateral modifications that might otherwise undermine their legal rights. Ultimately, this precedent will guide future disputes over employment contract modifications and the enforceability of arbitration agreements.