California Court of Appeal holds that non-signatory defendant employer can enforce arbitration agreement against employee

2021 case review: Alvarez v. Altamed Health Services Corp`

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In this case the Court of Appeals upheld imposition of arbitration in a case in which the Defendant did not sign the agreement. That is, the Plaintiff filed a lawsuit against their employer, and the defendant made a motion to have it transferred out of court and to an arbitrator.

The defendant employer moved the Court to enforce a mandatory arbitration agreement because the Plaintiff had signed that agreement on being hired by the defendant. Plaintiff contended that the agreement was not enforceable because the Defendant had not signed the agreement. The trial court ruled that the agreement to arbitrate had to be bilateral, and that the lack of the employer’s signature defeated that requirement.

The Appellate Court reversed. The employee’s offer letter had stated that acceptance of the arbitration agreement was an inherent part of the employment contract, so a mutual acceptance of employment at the company served as mutual acceptance of the arbitration agreement. Specifically, the employment offer had stated, “To avoid costly and time consuming litigation, we have adopted an arbitration process that applies as a condition of employment. Please review and then sign the enclosed Arbitration Agreement and return with your signed offer…”

As it was not separate from the employment agreement, the Court held that arbitration could be compelled.