Many Employee Handbooks contain provisions that attempt to require employees to arbitrate any disputes they may have with their employer. Another rather standard provision in many employee manuals states that “nothing in the handbook is intended to create a binding agreement between the employee and the employer”. A recent case out of California Court of Appeals found that this provision actually negated the binding effect of an arbitration provision found in the Employee Handbook.
The Court in Esparza v. Sand & Sea, Inc. observed:

“The employee handbook containing the arbitration provision included a welcome letter as the first page, which stated, “[T]his handbook is not intended to be a contract (express or implied), nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees.” The employee signed a form acknowledging she had received the handbook, which mentioned the arbitration provision as one of the “policies, practices, and procedures” of the company. The acknowledgement form did not state that the employee agreed to the arbitration provision, and expressly recognized that the employee had not read the handbook at the time she signed the form. Under these circumstances, we find that the arbitration provision in the employee handbook did not create an enforceable agreement to arbitrate. We therefore affirm the trial court’s denial of the employer’s petition to compel arbitration.”

If your company’s Employee Handbook contains similar provisions you should promptly contact your legal counsel to create a binding arbitration agreement in light of the decision in Esparza.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.