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Arbitration Agreement in Handbook

An arbitration delegation provision is “an additional prior agreement” to resolve threshold issues relating to the arbitration agreement. Id. at *6-*7. As a divisible agreement, it is deemed valid and enforceable unless a specific dispute is made. Id. at *7. Conversely, if such a provision is not directly challenged, it is considered valid. And in this case, “previous issues such as the validity of an arbitration agreement would be submitted to the arbitrator.” Id. at *7. The employer appealed and the Court of Appeal reversed the trial court`s decision, finding that the arbitration agreement contained in the manual was binding and ordering the employee to initiate arbitration. A recent U.S. Court of Appeals decision for the Eighth Circuit serves as a warning to employers who are considering including an arbitration clause in their employee handbook. In addition, according to the court, the employer is not required to inform the employee that an arbitration clause has been added to the November 2017 Employee Handbook.

California courts have long ruled that a party is bound by a contract, even if they haven`t read the content before signing. The plaintiff argued that the arbitration agreement was unscrupulous and therefore should not be enforced. He pointed out that he was not in a position to negotiate the terms of the employee`s manual and therefore there was unequal bargaining power. He also argued that requiring a plaintiff to pay a proportionate share of the arbitrator`s costs and fees violates California law because a plaintiff filing feHA claims cannot be forced to pay costs and charges in an amount greater than it would cost to bring a lawsuit. He added that the provision granting attorneys` fees to the prevailing party was illegal because defendants in FEHA cases can only recover attorneys` fees if the plaintiff`s claims are frivolous, unreasonable or unfounded. The parties have agreed that the Federal Arbitration Act (“FAA”) governs the arbitration agreement. The FAA favors arbitration and an agreement is maintained unless fundamental principles of state contract law, such as the absence of mutual consent or unscrupulous conditions, render it unenforceable. Under California law, an arbitration agreement can be binding even if a party does not read it.

The court also briefly addressed the fact that ambiguities can be interpreted against the employer or the author of the employee`s manual. “An employer`s efforts to have it both ways and to claim that a manual is not a contract [like this], but that an employee who confirms receipt of a manual has contractually agreed to settle disputes with his employer can backfire.” (Id.) (Quote 1 Domke from Commercial Arbitration (2012), § 16.11.) The Court also briefly stated that “an arbitration agreement is illusory if, as in this case, the employer can unilaterally amend the manual.” (Sparks, above, at 1523.) After terminating the applicant`s employment relationship, the company filed a lawsuit against the company and its CEO for sexual harassment, several claims under the Employment and Housing Equity Act (“EHEF”) and a lawsuit for non-reimbursement of business expenses. The defendants filed a claim for enforcement of the arbitration on the basis of the arbitration clause in the Employee Handbook. The plaintiff argued, among other things, that he was not aware that the company had revised the employee`s manual to include an arbitration clause. In the Applicant`s view, given the poor employment situation and the written complaints he had submitted to the President of the Company about the Chief Executive Officer during his employment, he would not have consented to the arbitration. It is possible to maintain a binding binding arbitration program; In fact, federal law has never been more supportive of the enforcement of labour dispute settlement agreements. For employers to effectively implement a mandatory arbitration program – including those who waive class and class actions – it is not enough to tell employees in a manual that they must arbitrate and simply distribute an arbitration policy without developing further evidence that the employee has accepted the policy as a contractual obligation to arbitrate covered disputes. In fact, PrimeLending`s lesson is that an employee`s acceptance of an arbitration agreement should not be vague or unclear and should be clearly expressed by the employee.

Upon hiring, the employee was provided with a copy of the company`s employee manual. At the time, the manual did not contain an arbitration clause. The employee signed a “receipt and confirmation” of this manual. The Court also described the wording of the 2006 manual as “more informative than contractual. Since the respondent did not refer to or refer to the arbitration requirement in the acknowledgement, the claimant should not be required to arbitrate. (Id. at 1520.) He continues: “The confirmation form did not refer to the arbitration clause, let alone the fact that he would be bound by it.” (Id. at 1522.) The trial court dismissed the employer`s request for arbitration. Usually, the fact that a party does not read a contract before signing it shows a lack of due diligence. But the court argued that the evidence did not support a lack of due diligence on the part of the employee because the receipt and confirmation form signed by the employee did not mention that the manual now included an arbitration agreement.

However, if the arbitration agreement is buried in an employee manual – especially one that contains some standard languages common to many manuals – it may be more difficult for the employer to enforce it. The employment lawyers at Schneiders & Associates, L.L.P. work with employers of all sizes to develop a personalized and specific employee handbook. Whether you are considering creating an employee manual for your company or would like us to review or update your existing manual, contact our office to request an employee manual questionnaire and make an appointment to discuss your company`s manual policies and requirements. .

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