When Your Employer Can (and Can’t) Force You to Arbitrate Your California Wrongful Termination Case

Employee HandbookWhen you are pursuing your employer for employment discrimination, there are paths you can choose and sometimes some hurdles to clear in choosing a course that will give you a good chance of obtaining the successful outcome you need and deserve. Sometimes, one of these hurdles is avoiding having your case sidetracked into binding arbitration. In a recent case from Southern California, the California Court of Appeal concluded that an employer couldn’t use a signed employee handbook to force the employee into arbitration because the employer had written into the handbook express language stating that it did not create a binding contract.

The employee in the case, January Esparza, started working at the Shore Hotel, a Santa Monica beach resort, in the fall of 2012. Just like most new employees starting most new jobs, Esparza had to sign several documents upon commencing work for the hotel. In Esparza’s case, one of these documents was an employee handbook. Like a lot of employee handbooks, it was long and dense with information. Its first page expressly made it clear that “this handbook is not intended to be a contract (express or implied), nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees.”

It also had another paragraph that re-stated this provision, located in the last two pages of the handbook. However, in an all-caps section located on pages 3 and 4 of the handbook, the document stated that the employer and employee “further agree… [to] utilize binding arbitration to resolve all disputes that may arise out of the employment context. Both the company and I agree that any claim, dispute, and/or controversy. . . shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act.”

Unfortunately, for this employee, the employment was not a successful one, ending only nine months after it began. In the summer of 2013, the employee launched a legal complaint against the employer, alleging “sexual harassment, sex discrimination, wrongful termination, and intentional infliction of emotional distress.” The employer, of course, filed a request with the trial court, asking the judge to order the two sides to arbitrate the case. The employer’s argument asserted that the signed employee handbook constituted a valid agreement between the two sides to submit these kinds of disputes to binding arbitration.

The employee argued to the contrary, contending that her signature merely acknowledged receipt of the handbook and nothing more. The trial court ruled in her favor, concluding that the handbook was not an employment contract, and the two sides had no valid agreement for mandatory binding arbitration.

The employer appealed but again lost. California public policy strongly favors contractual arbitration, but the law also makes it clear that this policy only covers parties that have mutually agreed to arbitrate. The employee and employer in this case had no such agreement. The employer’s argument — that the arbitration provision on pages 3 and 4 created a binding contract — was undermined by the rest of the employee handbook. The employer essentially asked the courts to find within the handbook the existence of a legally enforceable obligation to arbitrate, even though page 1 of the handbook explicitly said that the document did not “create any legal enforceable obligations.”

The language in the handbook, with its contradictory paragraphs, was ambiguous and unclear, and, when that happens, the law requires interpreting the ambiguity in favor of the party who did not draft the document. In this case, the employer composed the handbook, so the trial court was right to rule in favor of the employee.

When you decide to undertake an employment discrimination case, your employer may have many tools at its disposal in its effort to derail your case. To give yourself a strong chance of success, contact experienced California employment counsel. The determined Oakland employment attorneys at the Law Offices of Stephen M. Fuerch have many years of experience helping employees with pursuing a fair recovery for the harm they suffered due to their employers’ discrimination. Contact us through our website or call our office at (925) 463-1073 to schedule your confidential initial consultation today.

More Blog Posts:

Appeals Court Revives Wrongful Termination Case Brought by California Worker Fired After Suffering Workplace Injury, Oakland Personal Injury Attorney Blog, Feb. 15, 2016

FEHA Protections Apply to Worker Regardless of His Immigration Status, Oakland Personal Injury Attorney Blog, July 31, 2014