Blog: The California Workplace Advisor

Introduction

Arbitration is not a perfect substitute for a jury trial. Appeals are limited, many arbitrators favor a “split the baby” result, and the employer bears most of the cost. Some claims cannot be arbitrated at all — most prominently, representative PAGA claims and sexual harassment and assault claims. Even so, the advantages usually outweigh the risks: arbitration can limit or eliminate wage-and-hour class actions, and it avoids the emotion that so often permeates jury deliberations and verdicts.

But the fact remains that, in California, the odds are that if a court can find a reason to deny enforcement of an employment arbitration agreement, it often will, notwithstanding that the U.S. Supreme Court and even the Ninth Circuit have repeatedly held that, generally speaking, arbitration agreements are to be scrutinized as any other contract. The list of what constitutes valid reasons for not enforcing an arbitration agreement is long. But as a recent Ninth Circuit decision makes clear, sometimes it is best not to get spooked by the specter of some exotic defense to enforcement of an arbitration agreement, but instead just focus on the basics.

What Happened

In Rickies v. Thermo Fisher Scientific Inc., the defendant-employer sought to enforce an arbitration agreement even where there was no signed agreement. Instead, the employer argued that an email sent to an employee, stating that mandatory arbitration was a condition of employment, and where the employee continued to work after receiving this email, was enough to create an agreement—even though the employee did not respond to this email or subsequent, similar emails. Indeed, there was no indication that the employee even read the emails, clicked the hyperlink to open the agreement, or interacted with the arbitration materials in any way.

The Ninth Circuit’s logic and decision here is not surprising at all. But this is not to say that the only way to demonstrate the existence of an agreement is by an employee’s signature. As the court pointed out, an arbitration agreement can be formed where an employee, even if not signing the agreement, acknowledges receipt of the agreement. Alternatively, an arbitration agreement can be formed where an employee acknowledges receipt of an employee handbook, so long as the handbook states that binding arbitration is a condition of continued employment. In short, whether through an exchange of emails, clicking on a hyperlink, a signed agreement, or something else, there needs to be objective indicia that the parties to an agreement intended to be bound by it; in other words, evidence of mutual assent.

Takeaways

The biggest takeaway, based upon the Rickies decision, is pretty simple. You would not reasonably think you bought a house where you made several offers without a response, and you would not reasonably think you sold your car where you repeatedly suggested to a potential buyer to make an offer, but the only response you received was silence. So, with regard to employment arbitration agreements, don’t simply hit “send” on the email attaching/containing the arbitration agreement. Follow up—and if necessary, be prepared to rescind an employment offer—or terminate employment—if your outreach is ignored. That is the core of a “mandatory” arbitration agreement upon which employment is conditioned.

All of this said, deciding whether mandatory arbitration is appropriate for your company, and then executing upon that decision, should be considered thoughtfully with legal counsel. We at Hirschfeld Kraemer are ready to address any questions and concerns your company may have in this very important but fraught area of California law.

For more information, contact Monte Grix or Madison Romine in the Los Angeles office of Hirschfeld Kraemer LLP. Monte can be reached at 310-255-1827 or mgrix@hkemploymentlaw.com. Madison can be reached at 310-255-7538 or mromine@hkemploymentlaw.com.