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Leave arbitration agreement out of handbook

by on
in Employment Law,Human Resources

Like most employers, your em­­ployee handbook probably in­­cludes a disclaimer informing employees that nothing in the document creates a contract. That way, you can change benefits and policies as you see fit and don’t have to get employees’ consent.

But what if your handbook also includes a clause that says employee disputes must go to arbitration instead of state or federal court, where a run­­away jury might bankrupt the company? Bad idea.

Separate any such agreement from your handbook and get the employee (and employer) to sign the stand-alone document. Otherwise, it may not be enforceable in California.

Recent case: Ana was an administrative assistant in the HR department at the Cordevalle Golf Club. She gave a deposition in an employee’s discrimination lawsuit. Shortly after, she was terminated.

She sued, alleging retaliation for testifying, as well as discrimination.

The golf club asked the court to transfer the case to arbitration because Ana had allegedly agreed to arbitrate all employment-related claims. The company handbook, which had 70 pages, did include an agreement to arbitrate. And Ana had signed the last page of the handbook, acknowledging that she had received, read and understood everything in it.

However, the handbook also in­­cluded a disclaimer notifying em­­ployees that it was not a contract.

The court refused to enforce the agreement, concluding that it wasn’t really a contract. Because the arbitration agreement was buried in the document and be­­cause the document included a disclaimer that it did not create a contract, the court refused to rule that Ana agreed to a contract.

Plus, the golf club hadn’t “signed” or otherwise acknowledged the arbitration agreement either. (Tamayo v. Cordevalle Golf Club, No. H037983, Court of Appeal of California, 6th Appel­­late District, 2013)

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