If, like many employers, you include an arbitration clause in your employment applications, take note of a recent California Court of Appeal case. If your application also preserves at-will employment status and specifies that the application is not a contract, you may not have a binding agreement to arbitrate employment disputes.
Recent case: Laurie Lyng applied for a job with Brendan Travel and signed an application that said she agreed to arbitrate most employment disputes that might arise during the course of her employment.
The application also said there was no employment contract between employees and the company, and that everyone was an at-will employee. It went on to explain that nothing in the application “or any other information conveyed during an interview creates an employment contract between me and the Company. I also understand that such materials and information do not create an employment contract if I am hired by the Company.”
The company fired Lyng shortly after she asked for accommodations to undergo breast cancer treatment and surgery. She was hired in October, diagnosed in November and asked for time off in December. She claimed she was told she was being fired because the company was “worried about her health” and concerned that she could no longer do the job she was hired to perform.
She sued for disability discrimination, alleging she had been denied leave as a reasonable accommodation for her new disability. She was not eligible for because she had worked for the company for only a few weeks.
The company asked the court to send the case to arbitration. The court refused, reasoning that the application was not a contract—it specifically stated that it was not—and that there was no other written agreement that could be viewed as a contract. (Lyng v. Brendan Vacations, No. B207245, California Court of Appeal, Second Appellate Division, 2008)
Final note: The problem in this case might have been avoided by providing a separate document, apart from any application, to be signed at the time of hire that included the arbitration clause.
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