Employee Handbooks Might Not Create Legally Binding Arbitration Agreements
Where an employee handbook contains an arbitration provision but included a welcome letter as the first page, which stated, “[T]his handbook is not intended to be a contract (express or implied), nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees”, the arbitration provision in the employee handbook did not create an enforceable agreement to arbitrate. In Esparza v. Sand & Sea, Inc., the employee signed a form acknowledging she had received the handbook, which mentioned the arbitration provision as one of the “policies, practices, and procedures” of the company. The acknowledgement form did not state that the employee agreed to the arbitration provision, and expressly recognized that the employee had not read the handbook at the time she signed the form. Under those circumstances, the Second Appellate District, Division Four of the California Court of Appeal found that the arbitration provision in the employee handbook did not create an enforceable agreement to arbitrate.