Employer may not force former employee to arbitrate claims, even if she led executives to believe she signed arbitration agreement before resigning

October 17, 2012

Gorlach V. The Sports Club Co., California Courts of Appeal
-2nd District No. B233672, October 16, 2012

    Susan Gorlach worked for The Sports Club Co. as the director of human resources. In 2010, Sports Club revised its employee handbook to include an agreement to arbitrate claims, which all employees had to sign as a condition of their employment with Sports Club. Although Gorlach led Sports Club executives to believe she had signed the arbitration agreement, she did not. On Aug. 6, Gorlach resigned. In 2011, she sued Sports Club for wrongful termination, retaliation, and sexual harassment. Sports Club moved to compel arbitration of her claims, and argued that even though Gorlach had not signed the agreement, she assented to it because she continued to work for Sports Club after learning that it was condition of her employment. Gorlach argued that the arbitration agreement was not enforceable given that she had not signed it. The trial court denied the motion to compel arbitration, finding that no arbitration agreement existed.
    Affirmed. Even if an employee does not sign an arbitration agreement, an agreement to arbitrate may be implied when the employee accepts the agreement by continuing her employment. However, such a contract will only arise when there is a mutual agreement between the parties and intent to promise. In this case, Gorlach did not sign the agreement, and never planned on doing so. Thus, there was no mutual intent to agree to the arbitration agreement, and never planed on doing so. Thus, there was no mutual intent to agree to the arbitration agreement. Further, the employee handbook only urged employees to agree to arbitration and did not unilaterally impose an arbitration agreement on its employees. As such, by choosing not sign the agreement, Gorlach did not intend to be bound by it. Consequently, there was no implied agreement to arbitrate, and the trial court's denial of the petiton to compel arbitration was correct.
Opinion by Justice Suzukwa 

http://www.beverlyhillsemploymentlaw.com/