California Labor &
Employment Law Blog
Aug 1, 2012

Arbitration Provision in Employee Handbook Is Not an Enforceable Contract

Topics: Arbitration Agreements, Court Decisions

A California state court decision issued this week reminds California employers that arbitration policies set forth in employee handbooks generally do not amount to an enforceable agreement to arbitrate claims.  In Sparks v. Vista Del Mar Child & Family Services, the employer had an employee handbook containing, among many other policies, a policy requiring arbitration of employment disputes.  The handbook (like most) elsewhere included language making clear that the handbook was not an express or implied contract.  Employees were required to sign a form acknowledgement indicating they had received the handbook.  However, the acknowledgement did not specifically allude to the arbitration policy or separately include any agreement to arbitrate.  A former employee filed an employment-related claim against the employer, and the employer moved to compel arbitration, arguing that the employee had agreed to arbitrate the dispute by virtue of his signed acknowledgement of receipt of the employee handbook.  The court refused to compel arbitration, holding that there was no evidence that the employee had agreed to arbitrate.  The court reasoned that the arbitration provision was buried in a lengthy employee handbook, the handbook itself stated that it was not intended to create a contract, the acknowledgement form made no specific mention of arbitration, and the handbook also stated that the employer could modify the policies therein at any time, making any agreement to arbitrate illusory.  The court also noted that even if there was a valid agreement to arbitrate, it would be still be unenforceable due to unconscionability because the arbitration policy did not provide for adequate discovery and incorporated AAA arbitration rules that were not included nor provided to the employees. 

The Sparks case is a good reminder that to be enforceable, employment arbitration agreements ideally should be free-standing agreements signed by employees.  They may be included on acknowledgement forms or in broader agreements, but the arbitration provision should be a prominent provision, making the employee's knowledge of the provision and agreement thereto unmistakeable.   

About CDF

For over 25 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

> visit primary site

About the Editor

Robin Largent has a regular presence in California state and federal courts and has been lead defense counsel and appellate counsel for large and small California employers in litigation (and arbitration) ranging from individual discrimination and harassment claims to complex wage and hour representative and class actions. She also leads the firm’s appellate practice, having substantial experience and success handling appeals, writ petitions, and amicus briefs in both state and federal court on issues such as class certification (particularly in the wage and hour arena), manageability and due process concerns associated with class action trials, exempt/non-exempt misclassification issues, meal and rest break compliance, trade secret/unfair competition matters, and the scope of federal court jurisdiction under the Class Action Fairness Act.
> Contact   > Full Bio   Call 916.361.0991

CDF Labor Law LLP © 2020

About CDF What We Do Contact Us Attorney Advertising Disclaimer Privacy Policy Cookie Policy