Whether a claim is subject to arbitration is one of the most hotly contested
litigation topics. Employers often have an interest in protecting themselves from protracted litigation by seeking to streamline the process through arbitration.
Use of Employee Handbooks
Arbitration clauses are frequently found in written employment agreements. “At- will” employees often don’t have a written contract. In order to provide this group with notice and an opportunity to review and understand the existence of their rights, employers will frequently use employee handbooks. Employees are provided a copy of the handbook in advance of starting employment, and given the opportunity to review it before they provide their employer written acknowledgment that they have read, understand, and agree to be bound by the company polices.
Changes to Company Policies
What happens when you need to make changes to your company policies? Can you just hand your employees a complete copy of you updated employee handbook, without specifically pointing out what policies have been changed? Is that fair to the employees who are handed a voluminous book of policies and expected to review them all to see which ones have been changed? The Second Appellate District of the California Court of Appeals recently decided that it was sufficient. Even when the employee argued that he never bothered to read the new handbook.
In Conyer v. Hula Media Servs., LLC, 53 Cal. App. 5th 1189 (2020), an employee was provided a copy of the company handbook. He signed an acknowledgement statement that provided:
“This is to acknowledge that I have received a copy of the Employee Handbook. This Handbook sets forth the terms and conditions of my employment as well as the rights, duties, responsibilities and obligations of my employment with the Company. I understand and agree that it is my responsibility to read and familiarize myself with all of the provisions of the Handbook. I further understand and agree that I am bound by the provisions of the Handbook. I understand the Company has the right to amend, modify, rescind, delete, supplement or add to the provisions of this Handbook, as it deems appropriate from time to time in its sole and absolute discretion.”
Later, the company determined that it needed to revise its arbitration agreement and provided the employee with a new handbook. He again signed the acknowledgment statement. Later a dispute arose, and the employee attempted to bring a lawsuit against his employer for a cause of action covered under the company’s new arbitration agreement. The company filed a motion to stay the lawsuit and force the matter to binding arbitration, pursuant to that agreement.
Trial Court Denies Request to Arbitrate
The trial court denied the company’s motion to compel arbitration. The court first recognized that “a party’s failure to read a contract constitutes a lack of the reasonable diligence required of parties before they sign a contract” and therefore is not an excuse to be bound by the contract terms. Yet, the court found that the employee’s actions did not necessarily demonstrate a lack of reasonable diligence. Instead, the court focused on the company’s actions, and their failure to indicate that the handbook now contained an arbitration agreement. The court concluded that is was “fundamentally unfair to presume that Plaintiff was aware of the arbitration clause” and therefore, lacked mutual assent to arbitrate.
Reversed on Appeal
The company appealed and the appellant court reversed the decision., finding that the employee did not deny signing the acknowledgment of receiving the updated handbook, and that, since there was no evidence he did not have an opportunity to review it before signing, the employee demonstrated assent to the arbitration clause. The Court further noted, it was the employee’s responsibility to read and understand the provisions, and the company had no duty to call the arbitration agreement to his attention.
Takeaway
This case provides a cautionary tale to both employees and employers. As
employees, make sure that, if you are provided a company handbook or an updated handbook, take the time to read and understand the provisions by which you will be bound. As employers, make sure you offer an opportunity for employees to review any agreement if you want the court’s support in later enforcing that agreement.
If you need assistance reviewing or drafting your company policies, Contact CASHMAN LAW today for a free consultation to see how we might assist in drafting the provisions in your company’s policy memoranda or employee handbooks.
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