Salomon Smith Barney recently sent to its employees a new employment handbook that mandates NYSE arbitration for all types of employment claims, and includes language forbidding employees from taking any type of customer information when they leave the firm.
Employees are instructed to sign a "receipt form" for the handbook documenting that they have received it.
The receipt form states: I agree to be bound by the Travelers/Salomon Smith Barney Principles of Employment, which includes a predispute, employment arbitration provision, as part of entering into, or continuing, an employment relationship with Salomon Smith Barney.
The document requires employees to arbitrate all disputes at the NYSE, including Title VII civil rights claims, as well as claims under the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), The Family and Medical Leave Act and ERISA. An appendix to the handbook notes that the agreement does not preclude the Equal Employment Opportunity Commission from exercising jurisdiction over disputes covered by Title VII, the ADEA or ADA.
Salomon Smith Barney may be the first major firm to draft a private predispute arbitration agreement in anticipation that the NASD and the NYSE will be excluding statutory civil rights claims from mandatory arbitration. Currently pending at the SEC is a proposal by the NASD to eliminate mandatory arbitration of discrimination or sexual harassment claims. The proposal would allow for a one-year delay to allow firms to come up with their own agreements.
But the firm's new employment handbook goes further than simply mandating arbitration. In one paragraph in the appendix, the firm asserts that arbitrators "shall be bound" by the firm's procedures and policies and "shall not have the authority to alter or otherwise modify the parties' 'at will' employment relationship," which is described several times within the handbook. This appendix clause also states that arbitrators may not "substitute his, her or their judgement for the lawful business judgement of the Firm's management," and that panelists may not award punitive damages "except where expressly provided for by applicable statute. ... "
Salomon Smith Barney's new Principles of Employment also contain non-compete language. The handbook says:
.. you must never use or disclose to anyone not affiliated with [the firm] any confidential, proprietary or unpublished information to which you have access. This applies while you are employed with us as well as after your employment ends. If you leave the Firm, you may not keep or take with you any records, written or otherwise, that relate to the above. Proprietary information is further defined to include "client documents," "client lists" and "customer information and account activity."
Disclosure of such information will result in "irreparable harm" to the firm, the handbook says. "Therefore, employees must understand and agree that they are subject to an injunction to prevent the breach of this policy. Upon termination of employment, all originals and copies of proprietary and/or confidential information must be returned."
A separate section of the handbook entitled "If You Leave the Firm" states again that terminating employees must return "any proprietary or confidential information" and requests that employees who resign give two weeks notice.
"This allows for a smooth transition," the document states.
Last year, the firm in some instances began requiring brokers to sign non-compete agreements when they accepted house accounts. The new handbook, however, apparently covers all accounts managed by all brokers at Salomon Smith Barney.
A Salomon Smith Barney spokesperson says employees have signed something similar "in at least the prior year," but "[the new handbook] is not a non-compete."
The firm did not provide further details by press time.
One Salomon Smith Barney rep says brokers in his office are upset with the handbook and many won't sign it.
But another rep at the firm says, "We haven't seen a thing. In the past, we've ignored those things."