From Lexology, Manatt Phelps & Phillips LLP discuss a recent case in which a court said that continued employment implied acceptance of an arbitration agreement. They write:
By continuing to work for a company, the plaintiff impliedly accepted an arbitration agreement, a California appellate panel has ruled, reversing the denial of a motion to compel arbitration.
“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 consent to the arbitration agreement,” the panel wrote. “The uncontradicted evidence in this record demonstrates that Diaz maintained her employment status between December 2 and December 23, and remained an employee at the time of the hearing in this case.”
As a result, the plaintiff was already bound by the arbitration agreement before the presentation of the letter indicating both her rejection of the agreement and her intent to remain employed. The court rejected Diaz’s contention that the letter forced Sohnen to choose whether to proceed without arbitration, finding that at most “it was an attempt to repudiate the agreement” that failed.
“In any event, because the employment agreement between Diaz and Sohnen was at-will, Sohnen could unilaterally change the terms of Diaz’s employment agreement, as long as it provided Diaz notice of the change,” the court wrote.
Reversing the denial of the motion to compel arbitration, the appellate panel remanded the case to the trial court.
One member of the panel dissented, writing that “an employee, like any contracting party, can reject an arbitration agreement offered by an employer and yet continue to work for the employer.” Although Diaz rejected the agreement both orally and in writing, the majority opinion “gives employers the unilateral power to create an implied agreement simply by announcing that continued employment will constitute acceptance, no matter how strongly or clearly the employee manifests his or her rejection of the proposed agreement,” the dissent said.
To read the opinion in Diaz v. Sohnen Enterprises, Inc., click here.