Articles Discussing Case:
Littler Mendelson, P.C. • September 12, 2016
On August 22, 2016, a California Court of Appeal held that an arbitration agreement in an employee handbook did not create an enforceable agreement to arbitrate. Esparza v. Sand & Sea, Inc. et al., B268420 (Aug. 22, 2016). The employee handbook at issue stated, “[T]his handbook is not intended to be a contract . . . nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees.” Although the employee signed the handbook acknowledgement form, which mentioned the arbitration agreement contained in the handbook, the form did not state that the employee agreed to the arbitration. As such, the appellate court held that the trial court properly denied the employer’s petition to compel arbitration. This case emphasizes the importance of employers having standalone arbitration agreements for employees or removing landmines that may be lurking in their handbooks.