Arbitration Agreement Employer Never Signed Is Still Enforceable

By Joanne Deschenaux Oct 13, 2017
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An employer that never signed an arbitration agreement it presented to an employee could still enforce the agreement because the circumstances surrounding the worker's hiring showed that both parties intended to arbitrate employment disputes, the California Court of Appeal ruled.

In September 2014, PresbiBio LLC, a medical device manufacturer, made a written offer of employment to Bryan Blain, a mechanical engineer. As a condition of employment, Blain was required to sign an agreement to arbitrate all workplace-related disputes. Blain signed the agreement. However, the document did not contain the employer's name and contained no place for the employer to sign.

Eight months later, PresbiBio fired Blain, and Blain filed a complaint against the company for wrongful termination. PresbiBio then filed a motion to compel arbitration. The company's human resources administrator said she had prepared the offer letter and also sent the arbitration agreement to Blain.

Blain argued that PresbiBio did not show a valid and enforceable arbitration agreement. The trial court agreed and denied the company's motion. PresbiBio appealed. The appellate court reversed and ordered arbitration.

[SHRM members-only HR Q&A: What are the California rules regarding mandatory arbitration agreements, and how do they differ from federal law?]    

The appellate court first noted that arbitration is a matter of contract and that a party cannot be forced to arbitrate unless he has agreed to do so. In addition, the party seeking to compel arbitration has the burden to show the existence of a valid arbitration agreement.

It's undisputed that Blain agreed to arbitrate his employment disputes as a condition of his employment, the court said. And Blain executed both the employment offer and the arbitration agreement before he went to work for PresbiBio.

Although the arbitration agreement did not name PresbiBio as a party, this was not fatal to its enforceability, the court said. In construing the meaning of the agreement, the court's main focus was the parties' intent at the time that they entered into the agreement.

Under the circumstances, the only reasonable course was to read the arbitration agreement in conjunction with the offer of employment and construe them together, the court said.

Fairness required that Blain be compelled to arbitrate his claims, the court added. Blain sought the benefits of the employment relationship, the complaint included a cause of action for breach of the employment contract, and the other causes of action were all premised on his employment relationship with PresbiBio.

It would be unfair to allow Blain to rely on the employment contract to the extent it benefited him but reject the related arbitration agreement because it burdened him, the court concluded.

Blain v. PresbiBio LLC, Calif. Ct. App., No. G054106 (Sept. 28, 2017).

Professional Pointer: Although the court in this case ordered arbitration despite the flaws in the agreement, other courts have been less generous to employers in interpreting these documents. To ensure enforceability, all arbitration agreements should be carefully drafted and reviewed by counsel.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.     

 

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