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Separating Arbitration Agreements From Employee Handbooks

Consistent with what many consider an employment 'best practice,' all manner of employers distribute employee handbooks and have their employees sign a separate, written acknowledgement that they received a copy of the handbook.  Most of these handbooks contain clear statements that the employment is 'at-will.'   In addition, many of these handbooks contain language requiring that all employment disputes be submitted to arbitration, rather than decided in a court with a jury.   In late-2016, the practice of putting the important at-will language and the arbitration requirement in the same document became problematic.

The problem is that an agreement between the employer and the employee to arbitrate employment claims must be just that - an agreement.   The goal of at-will language, by contrast, is to make it clear that there is no employment agreement.  In Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.4th 781, the California Court of Appeal concluded that the presence of clear and unambiguous at-will language in the employee handbook, language which plainly stated that nothing in the handbook created any manner of employment agreement, nullified an arbitration agreement that appeared elsewhere in the handbook.   The appellate court held that an agreement to arbitrate must be clear and unequivocal, and that this standard was not met due to the presence of the possibly conflicting at-will language.

In light of Esparza v. Sand & Sea, those employers who wish to require arbitration of employment disputes should have that agreement spelled out in a separate writing, signed by both the employer and the employee, and which is completely independent of the employee handbook.

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