Court Finds Handbook, Arbitration Agreement Separate

March 27, 2001 ( - A California appellate court has ruled that an employee's written acknowledgment of the terms in an employee handbook did not bind her to an arbitration agreement in the handbook.

The California Appeals Court ruled in Romo v. Y-3 Holdings Inc. that the language of the arbitration agreement in the handbook indicated that it was intended to be a stand-alone agreement, despite its inclusion in the handbook, according to BNA Daily Labor Report. The decision affirmed the ruling of the trial court, refusing to force arbitration.

Signed and Sealed?

Romo sued the employer in a Los Angeles trial court over a dispute arising from her termination. Employer Y-3 Holdings moved to compel arbitration, claiming there was an arbitration agreement in the employee handbook.

Inside the handbook, the arbitration agreement contained unsigned lines for dates and signatures of the employee and the employer. The handbook also contained a page titled “Employee Acknowledgment.”  The acknowledgment page stated that the employee received, read, understood and agreed to comply with the contents of the handbook.

The plaintiff acknowledged that she had signed the acknowledgment, but claimed she was told that signing the acknowledgment would not trigger the arbitration agreement.  Her ex-employer maintained that Romo’s signature on the acknowledgment bound her to all of the matters contained in the handbook.

Separate Agreements

Looking at the handbook as a whole, the court concluded that it contained two separate agreements: an agreement to arbitrate and an agreement to be bound by the benefits, policies, rules and procedures contained in the rest of the handbook.

The agreement included a provision that said “This is the complete agreement of the parties on the subject of arbitration of disputes, except for any arbitration provision contained in any pension or benefit plan.”  The court held that no pension or benefit plan was at issue here.

Finally, the agreement contained a signature line for the employee and the employer, which suggested a “separate and severable agreement”, according to the court. The court concluded that, read as a whole, the arbitration agreement in the handbook would be effective only if both parties assented to that particular provision.

– Nevin Adams