Employees Bound to Arbitration Clause in Handbook

A California Court of Appeals recently ruled that employees who sign an acknowledgement of receipt of an employee handbook that contains an arbitration agreement is bound to the arbitration clause even if the employer did not specifically point out that provision. For California workers, this can have a substantial impact on potential claims against employers and the legal options available to employees. To learn more about how this may impact your claims, talk to an experienced employment law attorney in California today.

Conyer v. Hula Media Services

In this case, the plaintiff was hired as an employee of Hula Media Services in 2017 and was provided a copy of the employee handbook. At the time, the handbook did not contain an arbitration clause, and the worker signed an acknowledgement of receipt of the handbook. Later that year, the employer handed out revised employee handbooks to all workers, which contained in it an arbitration clause. The employee again signed an acknowledgement of receipt of the employee handbook. In 2018, the plaintiff sued his employer and their CEO for sexual harassment, failure to repay reimbursements, and other claims. The employer tried to compel arbitration according to the provision in the employee handbook, and the trial court denied the motion. The employer then appealed.

Court of Appeals Ruling

The California Court of Appeals reversed the ruling of the trial court and enforced the arbitration provision within the revised employee handbook. According to the court, the employer had no obligation to specifically point out the arbitration agreement in the revised handbook, and the employee signed an acknowledgement of receipt. The rule in California is that parties to a contract are bound by the terms, even if they did not read the terms before signing.

The court also denied the contention that the arbitration clause was unconscionable. The employee claimed that the unconscionability arose from the employer failing to provide its workers with the applicable arbitration rules, which the court denied. However, the Court of Appeals did find that the terms requiring the employee to pay a pro rata share of the arbitrator’s fees and recovery of attorneys’ fees for the employer were unconscionable, and it struck those terms from the agreement.

Implication for Workers

There are substantial implications for workers in California considering filing a lawsuit against their employer. First, an employee could be beholden to an arbitration agreement without realizing it if they fail to read the terms of their employee handbook or other employment contract. Second, an employer is not required to point out substantive changes or the existence of an arbitration agreement to employees when altering the terms of the employment contract. However, one silver lining is that once in arbitration an employer cannot force an employee to pay a pro rata share of fees or recover their own attorneys’ fees if the arbitrator finds in the employer’s favor.

Talk to an Employment Law Attorney

To learn more about how arbitration agreements may impact your employment law claims against an employer, call or contact a knowledgeable California employment law attorney today.