A new hire packet for an employee can be painfully long (for the employer and the employee). The company’s grievance and arbitration policy and procedure can take up a lot of space in the packet. Getting an enforceable arbitration agreement is obviously critical. So that raises the question: Can an employer have a one-page arbitration agreement in the new hire packet and incorporate the grievance and arbitration procedures (which can span over 10 pages) by reference. The answer is yes, but the employer has to handle this process carefully.
General contract law principles govern whether the parties have entered into a binding arbitration agreement. Therefore, the employee’s acceptance of the arbitration policy may be express or implied-in-fact by the employee’s continued employment where acceptance of the agreement is made a condition of employment.
Courts have drawn a line (although not perfectly) between the agreement to arbitrate, on one hand, and the procedures governing the arbitration process on the other. The employer and employee can agree to arbitration, but use procedures of JAMS, AAA, the California Arbitration Act (CAA), or its own company specific grievance and arbitration procedure.
It is also well established that the parties may incorporate by reference into their contract the terms of some other document. Each case turns on its facts. Generally, for the terms of another document to be incorporated into the document executed by the parties the reference must (1) be clear and unequivocal, (2) be called to the attention of the other party who must consent thereto, and (3) the terms of the incorporated document must be known or easily available to the contracting parties. The contract need not recite that it “incorporates” another document, so long as it guides the reader to the incorporated document. If these conditions are met, an employee may agree to arbitrate claims against his or her employer by signing an acknowledgment form that incorporates the employer’s employee handbook and the arbitration policy it contains. But again, handle this with care and make sure it’s done right.
In litigation, an employee may still oppose a motion to compel arbitration even though it signed an acknowledgment re: arbitration agreement, by arguing that it didn’t get a copy of the arbitration procedures. This shouldn’t present too much of a problem (perhaps depending on the judge) if the employer handles this part of the process really well.
In Cruise v. Kroger Co., 233 Cal.App.4th 390 (2015), a new hire signed a one-page document agreeing to arbitration. Despite being only one page, the agreement was pretty specific and incorporated by reference the company’s dispute resolution policy (what many companies call a “DRP”). The DRP wasn’t attached to the Agreement and the employee said she never got a copy. The trial court accepted employee’s evidence and denied Kroger’s motion to compel arbitration, finding there was no agreement to arbitrate. The appellate court reversed. The court drew a distinction between an agreement to arbitrate (which was detailed, in writing and signed by the employee) and procedures governing arbitration (which the employee said she never received). The court noted that in California, the general rule is that arbitration should be upheld unless it can be said with assurance that an arbitration clause cannot be interpreted to cover the asserted dispute. The only impact of Kroger’s inability to establish the contents of its arbitration policy is that Kroger failed to establish that the parties agreed to govern their arbitration by procedures different from those prescribed in the CAA (found at Code of Civil Procedure §§ 1280 et seq.). Unless the parties otherwise agree, the conduct of an arbitration proceeding is controlled by the California’s Arbitration Act. (See, e.g., §§ 1281.6, 1282, 1282.2.) So, the arbitration agreement was upheld as enforceable, but the appellate court said that arbitration would take place under the CAA. (The CAA is actually first rate substitute.)
But there are various ways to avoid the issue faced by Kroger — the employer just needs to think, plan and execute well (with the help of its labor attorney).
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