No Signature? No Problem! California Court Rules That Separate Signature Not Necessary To Enforce Arbitration Agreement

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07/24/2017

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No Signature? No Problem! California Court Rules That Separate Signature Not Necessary To Enforce Arbitration Agreement

By Greg Blueford

In a recent win for California employers, a California Appellate Court provided some leeway for employers who do not have separately signed arbitration agreements for their employees.  The court in Harris v. TAP Worldwide ruled that employers can enforce arbitration agreements under certain conditions even where an employee has not signed the specific agreement itself. Plaintiff Dwayne Harris filed a complaint against his employer, TAP Worldwide, asserting wrongful termination and wage and hour claims. TAP Worldwide attempted to compel the plaintiff to arbitration by relying on the arbitration agreement attached as an appendix to the company’s employee handbook, for which the plaintiff signed an acknowledgment of receipt. However, the plaintiff denied the existence of an arbitration agreement because he had not signed the actual attached agreement. The trial court denied TAP Worldwide’s request to compel arbitration.

On appeal, TAP Worldwide argued that the arbitration agreement was enforceable and that the arbitration policies were contained in three documents, including the employee handbook with the arbitration agreement attached in the appendix. Further, TAP Worldwide argued that because the arbitration agreement specifically stated that continued employment with the company will be deemed voluntary consent to the terms of the arbitration agreement, the plaintiff impliedly agreed to the arbitration provision.

The appellate court agreed with TAP Worldwide, finding the agreement to arbitrate was valid despite the lack of a signature on the actual agreement. The court distinguished this case with prior California case law (Sparks v. Vista Del Mar Child and Family Services) which required that the arbitration agreement itself be executed.

First, the separate acknowledgment form signed by the plaintiff here specifically referenced both the handbook and the arbitration agreement. In Sparks, the arbitration agreement was not specifically highlighted in the signed acknowledgement form.  Second, the plaintiff in Harris was deemed to have accepted the terms of the employee handbook (and, thus the arbitration agreement) because he started working for the Company and acceptance of the mandatory arbitration policy was an “absolute prerequisite” to continued employment.  The court stated that the plaintiff cannot accept an at-will job offer with all of its benefits and have “no responsibility to abide by one of its express conditions.”

COUNSEL TO MANAGEMENT

While employers should always make sure its employees sign a separate arbitration agreement, this ruling gives some leeway to employers that have not done so in past practice. As long as the arbitration agreement is specifically noted in the employee handbook, is a condition of continued employment, and the employee signs an acknowledgment of receipt, the Harris ruling states the arbitration agreement should be enforced. Adding those specific terms to the employee handbook will provide the employer another layer of protection when attempting to compel employees to arbitration. Contact the Saqui Law Group regarding any questions about your company’s arbitration agreements.

 


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