Arbitration Agreement Snafu

By Bill Wright

A federal trial court in California rejected an employer’s attempt to compel arbitration over an employee claim; the employer didn’t keep its own policy exceptions in mind. In 2009, the employer’s job application provided that any significant change in the terms and conditions of employment had to be approved by the Director of Human Resources.  In 2013, the employer rolled out an arbitration agreement, signed by the Vice President of Human Resources.  To cut a long story short, the Court rejected the employer’s attempt to rely on the arbitration agreement, because the arbitration agreement was a significant change in the terms and conditions of employment and there was no evidence that the Director of Human Resources approved it.  Of course, there might not still be a Director of Human Resources. Smith v. H.F.D. No. 55, Inc., No. 2:15-cv-01293-KJM-KJN (E.D. CA. March 8, 2016).

We need to watch out for those little restrictions we place on our own ability to contract with employees.