Do you need to tell your employees about arbitration clauses in their handbooks?

Award-Winning California Employment Law Firm Since 2012
On Behalf of Law Offices of Eric A. Boyajian | April 27, 2021 Work Agreements & Policies

In California, you may want to use an arbitration agreement when hiring employees. This is because the arbitration agreement requires you to go before an arbitrator, not the court, in the case of a dispute.

It is not against the law to include an arbitration clause in your employee handbook, and it’s something that you should consider including to help protect your business. In 2017, a case in California resulted in a ruling that stated that it is an employee’s job to read through the employee handbook, to familiarize themselves with the contents and to agree only when they are satisfied.

It was also determined that the employer doesn’t need to call special attention to an arbitration agreement when it’s included in the handbook. That being said, if you want to be fair and realistic, it’s not a bad idea to tell your potential employee that you do have an arbitration clause in the handbook. In fact, doing so may help you if they ever try to argue that they didn’t know about it. If you always tell everyone to look for it, then all of your employees should know about it and understand that they’re agreeing to it by signing their handbook.

Do you have to tell employees about a new arbitration agreement if you update your employee handbook to include one?

If you decide to update your employee handbook to include an arbitration agreement, it is your responsibility to inform employees of the changes to the handbook. If you don’t let the employees know that changes have been made, then there is no way for them to bring up questions or concerns or to know that they may not want to sign. It’s unfair to assume that your employees would read the handbook again, especially if they had studied it and agreed to it in the past.

When you work with arbitration agreements, it’s important for you to be fair and transparent. Your attorney can help you put together an agreement in your employee handbooks and make sure that anyone who signs is aware of that agreement or updated on the new contents when necessary.