Another arbitration case which is unfavorable to employers. A California Court of Appeal ruled that a human resources director who never signed the employer’s arbitration agreement, concealed that fact from her employer, and quit her job before doing so, could not be required to arbitrate her employment claims. Gorlach v. The Sports Club, No. B 233672 (Cal. Ct. App. Oct. 16, 2012). The Court rejected the employer’s equitable estoppel and implied contract theories and affirmed the denial of the employer’s motion to compel arbitration.
This case illustrates a pitfall for the unwary employer implementing an arbitration program. If an employer intends to require employees to sign an arbitration agreement as a condition of employment or continued employment, the employer needs to obtain a signed agreement. In addition, the employer should develop a system to audit that those signatures are obtained, including the signatures of members of management. There are also numerous other potential pitfalls with arbitration agreements so we suggest working with legal counsel prior to moving forward.