When a California employer changes its policies to include mandatory arbitration, does an employee’s continued employment after notification that an agreement to arbitration is a condition of continued employment, maintain that the employee has impliedly consented to the arbitration agreement?

In Diaz v. Sohnen Enterprises, this exact question arose. There, all employees of Sohnen Enterprises on December 2, 2016 received notice at an in-person meeting that the company was adopting a new dispute resolution policy requiring arbitration of all claims. The COO explained at this meeting that continued employment by an employee who refused to sign the agreement would itself constitute acceptance of the dispute resolution agreement. On December 22, 2016, a Sohnen Enterprises employee by the name of Erika Diaz (“Diaz”) filed a complaint alleging workplace discrimination. On December 23, 2016, Diaz and her lawyer presented Sohnen Enterprises a letter rejecting the agreement but indicating that Diaz intended to continue her employment. On that same day, Sohnen Enterprises was served with the complaint. On January 17, Sohnen Enterprises sent a demand for arbitration to Diaz’s counsel, based on the fact of Diaz’s continued employment.  The trial court denied the motion. The Court of Appeal thereafter reversed and held that Sohnen was within its rights to enforce arbitration.

The majority held California law in this area is settled: when an employee continues his or her employment after notification that an agreement to arbitration is a condition of continued employment, that employee has impliedly consented to the arbitration agreement. Additionally, because Diaz was an at-will employee, the majority noted that Sohnen Enterprises could unilaterally change the terms of Diaz’s employment agreement, as long as it provided Diaz notice of the change. Lastly, the majority concluded that Diaz did not demonstrate that the arbitration agreement was unconscionable.

WHAT THIS MEANS FOR EMPLOYERS?

California employers may unilaterally alter the terms of an at-will employment agreement, provided such alteration does not run afoul of the California Labor Code. Employers who wish to impose arbitration should be prepared to show that they gave employees adequate notice and that it is fair. Employers should not forget to comply with the requirements established by the California Supreme Court in Armendariz v. Foundation Health Psychcare Services, Inc.

If you are a California employer who is seeking a well-drafted arbitration agreement or rather, assistance in requiring mandatory arbitration for all employees’ disputes, please contact Garcia & Gurney, ALC.

Garcia & Gurney, ALC legal articles should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents of these articles are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.