Following on the heels of a recent California Supreme Court ruling that approved mandatory arbitration agreements for employment disputes, California appellate courts continue to enforce arbitration provisions between employers and employees. In the latest case, a California Court of Appeal required the arbitration of an employment claim even though the employee had never signed an arbitration agreement or a written acknowledgment of the employer’s arbitration policy.
Employer Adopts Dispute Program
Christine Craig worked for a Los Angeles-area company that was later acquired by Brown & Root Inc., a large construction firm. Brown & Root established a four-step employee dispute resolution program that included mandatory arbitration of claims. The policy was explained in a memo and brochure, which were mailed to all employees at their homes.
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Terminated Employee Sues
Eventually Craig was terminated and she sued Brown & Root, claiming wrongful termination, sexual harassment and gender discrimination.
Brown & Root asked the court to dismiss Craig’s lawsuit and order her to arbitrate her claims based on the company’s dispute resolution process. But Craig argued that she had not agreed to arbitration, pointing out that she hadn’t signed an acknowledgment of receipt of the materials detailing the arbitration program, and in fact had never received them.
The court sided with Brown & Root and sent the case to arbitration. After the arbitrator ruled against Craig, she appealed the court’s decision requiring the case to be arbitrated.
Lack Of Written Acknowledgment OK
The Court of Appeal decided that the arbitration policy was binding even though Craig never signed anything. That’s because the employer had evidence that the arbitration materials were mailed to Craig and weren’t returned. Company managers provided declarations that the information was sent to all workers on an employee mailing list. What’s more, the court said that by continuing to work for Brown & Root, Craig implicitly agreed to be bound by the dispute resolution program’s terms, including binding arbitration.
Agreement Fair
The court also said that the arbitration policy was fair because it satisfied the California Supreme Court’s new criteria for arbitration agreements. The court noted that the maximum cost to employees of arbitrating a dispute was $50, substantially less than court filing fees. And if an employee consulted a lawyer, Brown & Root would pay up to $2,500 for their legal fees. Plus, the program applied equally to claims brought by either the employer or employees, provided for a neutral arbitrator and discovery of information about each side’s case, and placed no restrictions on the types of damages employees could receive.
Practical Tips
Based on this case, it may be possible to enforce an arbitration policy that hasn’t been specifically agreed to by your employees. However, the best practice is to get a written acknowledgment from workers agreeing to abide by the policy, both to decrease the risk of disputes and because another court could rule differently. And always be sure to document your distribution procedures—such as by sending important notices by certified mail.