Court of Appeal rules multiple arbitration agreements are permissible

Employers that want to arbitrate all employment-related disputes have won support from California’s state appellate court system, which ruled it acceptable to create different arbitration agreements for different employment-related purposes, each with different terms and conditions.

Recent case: Encarnita lived in New York when she applied for a job with a tech company headquartered in California. On short notice, she flew to San Francisco for an interview. The company offered her a job with a $250,000 initial base salary.

As part of its hiring process, the company emailed Encarnita three separate documents: an offer letter captioned “At will Employment with Gravity4,” an “Employee Proprietary Information Agreement” and an “Employment and Nondisclosure Agreement.”

Each document included an arbitration agreement, with differing terms and conditions. Essentially, each agreement was tailored to the nature of the dispute, with differing arbitration rules to follow. Each agreement also required California arbitration.

Encarnita was terminated after just six weeks of work. She sued in California state court, alleging that none of the agreements were contracts and that they were unconscionable because they required her to come to California to sue. The lower court agreed with her.

However, the Court of Appeal of California reversed and ordered arbitration. It concluded that since she had easily come to the state for an interview, the choice of forum wasn’t unconscionable. Neither was having three different agreements for different employment-related issues. (Alonso v. Chahal, et al., Court of Appeal of California, 2017)