Employers: Arbitration Is A Contract, Not A “Policy”– Posted by Tyler J. Moore
I have been involved in a couple of recent cases where employers had an “arbitration policy” they wanted to enforce against former employees bringing claims related to their employment. In these cases, the employers had adopted an “arbitration policy” and incorporated that policy into their employee handbook. From an employer’s point of view, this is a logical method for adopting arbitration as the method of resolving disputes. The employee is required to comply with the rest of the policies in the handbook, or they could face disciplinary action or termination. Why wouldn’t a court require the employee to comply with a policy requiring arbitration of disputes?
That is where these particular employers, and their attorneys, got into trouble. Arbitration of disputes is not a “policy” that can be forced upon an employee. To be enforceable, the parties, in this case the employer and employee, must agree to arbitrate their disputes. Arbitration is a contract, not a policy. “As arbitration is a matter of contract, parties cannot be compelled to arbitrate unless they agreed to do so.” Weiss v. Lonnquist, 153 Wn. App. 502, 510, 224 P.3d 787 (2009); see also United Steel Workers v. Warrior & Gulf Navigation Co.,363 U.S. 574, 582, 80 S.Ct. 1347, 1353 (1960). Washington Courts favor the enforceability of arbitration agreements, but Washington’s leading cases rely upon signed arbitration agreements. See Adler v. Fred Lind Manor, 153 Wn.2d 331, 338, 103 P.3d 773 (2004); Zuver v. Airtouch Communications, Inc., 153 Wn.2d 293, 300, 103 P.3d 753 (2004). Although there are no Washington cases directly on point, it is unlikely that a Court would compel arbitration based upon an employee policy manual.
How then can the employer and employee create an enforceable arbitration agreement? The first order of business is to create a stand-alone arbitration agreement signed by the employee. The arbitration policy may be stated in the employee handbook, however, there must be a separate signed document evidencing the employee’s agreement to arbitrate. Ideally, this agreement will be signed by the employee as a condition of their employment with the company and the terms of the agreement are fair to the employee, but that is an issue for another blog. If you are an employer seeking to implement arbitration of employment disputes or an employee wanting to determine whether you will be required to arbitrate a dispute with your employer, please contact the employment law attorneys at Lasher Holzapfel Sperry & Ebberson.