On September 15, 2021, a divided panel of the Ninth Circuit Court of Appeals decided…
In a ruling dated August 26, 2020 in the case of Conyer v. Hula Media Services, LLC, a California Court of Appeal ordered an employee to arbitrate his harassment, retaliation and expense reimbursement claims. The employee had signed an acknowledgement of receipt for the company’s employee handbook, which included a mandatory arbitration provision. This represents another in a long line of decisions illustrating the well-established judicial preference for enforcing properly-drafted arbitration policies.
With the avalanche of new litigation prompted by the Coronavirus pandemic, AB 5’s assault on independent contractors and a succession of other ominous developments, the Conyer case is a welcome development for California employers. They need all the help they can get.
For these and many other reasons, arbitration agreements have become increasingly attractive, if not indispensable, to employers as an important first line of defense against employment-related lawsuits and other claims.
As readers of this publication are aware, the author has been championing the powerful protective properties of arbitration policies since at least 1992. That is when the U.S. Supreme Court first acknowledged the right of employers to unilaterally require that workplace disputes be submitted to binding arbitration, as opposed to being resolved through the traditional civil litigation system.
In a nutshell, without a legally-enforceable arbitration policy, workplace disputes will be resolved after a jury trial. The problem is, juries are typically comprised overwhelmingly, if not exclusively, of employees. Business owners and supervisors are normally excluded from juries during the voir dire portion of pre-trial proceedings. As a result of their natural pro-employee bias, juries resolve the overwhelming majority of employment cases against employers.
However, all is not lost. If a properly-drafted arbitration policy is in effect before a dispute arises, employment claims will be decided by an arbitrator, as opposed to a jury. This eliminates the jury-bias problem described above, thus giving employers a much better chance of prevailing. Other benefits associated with the arbitration process include far more prompt resolution of workplace disputes, greater opportunity to minimize negative publicity and substantially-reduced defense costs.
If an arbitration policy is properly-drafted and distributed, employees can be required to submit all employment disputes to arbitration, with limited exceptions. These should be referenced in the written policy, with particular attention to claims brought under the Private Attorneys General Act (“PAGA”).
In the Conyer case, the plaintiff began his employment with Hula in 2017. When hired, he received a copy of the employee handbook, for which he signed an acknowledgement of receipt. However, the handbook did not include an arbitration policy. Later in 2017, Conyer filed written complaints against the company, alleging unlawful harassment and retaliation, among other claims.
Subsequently, a revised employee handbook was distributed, for which Conyer signed another acknowledgement of receipt. The new acknowledgment form was identical to the previous version, and stated, “I understand and agree that it is my responsibility to read and familiarize myself with all of the provisions of the handbook…I understand the company has the right to amend, modify, rescind, delete, and supplement or add to the provisions of this handbook, as it deems appropriate from time to time in its sole and absolute discretion.”
Significantly, the new handbook included, for the first time, an arbitration provision.
Although the court of appeal found that various provisions of the new arbitration policy were unlawful, including those related to the apportionment of attorneys’ fees, arbitration fees and costs, it remedied these shortcomings by ordering the trial court to sever the offending provisions. As for the balance of the dispute, the court granted the employer’s petition to compel arbitration.
This case underscores the inestimable value to employers of properly-drafted and distributed arbitration policies. It has been the author’s experience that nothing discourages plaintiffs’ lawyers from accepting cases against employers more effectively than meticulously-drafted arbitration policies. This is likely due, at least in part, to an awareness that any employer savvy enough to distribute such a policy will likely make a formidable adversary in future litigation.
Employers interested in developing a legally-defensible arbitration policy are encouraged to contact my office to ensure this policy is properly drafted and distributed in accordance with the courts’ demanding, and constantly-evolving, legal standards. For several articles discussing the powerful, protective properties arbitration policies offer employers, please see the author’s website (http://www.jaygputnam.com/newsletter/).
Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over 38 years. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives. He has a remarkable record of success.
For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well.
You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. http://www.jaygputnam.com/newsletter/
This newsletter is not intended as a substitute for legal advice and its content is provided for discussion purposes only. Any suggestions or recommendations must be assessed by competent legal counsel to be sure the unique requirements of each workplace are properly considered.