Arbitration Agreement Held Valid Despite Employee’s Rejection
By: Jizell Lopez
On Wednesday, a three judge panel for the Second Appellate District provided a win for employers, ruling that although an employee would not sign an employer’s arbitration agreement, the employee is still bound by the arbitration agreement because the employer declared upfront that the arbitration agreement was a mandatory condition of continued employment.
On December 2, 2016, Sohnen Enterprises (“the Company”) notified its at-will employees at a staff meeting that it was adopting an arbitration policy to resolve employment-related disputes. At this staff meeting, the Company’s Chief Operating Office informed Plaintiff Erika Diaz (“Diaz”) and other employees that by continuing to work, the Company would take it as an acceptance of the arbitration agreement regardless if the employee signed the written version. At the meeting, Diaz refused to sign the agreement and made it clear that she did not want to accept the terms. The Company had private follow-up meetings with Diaz and advised her again in English and Spanish that continuing to work constituted acceptance of the agreement. On December 23, 2016, Diaz filed a discrimination suit against the Company while her counsel simultaneously sent a letter to the Company reiterating that Diaz rejects the arbitration agreement but she still intends to continue her employment.
In January of 2017, the Company sent Diaz a demand for arbitration based on the fact that Diaz had continued her employment with the Company. The Company ultimately filed a motion to compel arbitration because Diaz would not agree to submit her claims to arbitration. The trial court denied the motion ruling that the “continued employment” agreement was a “take- it or leave-it contract” which resulted in no meeting of the minds. The Company appealed the decision.
The Second Appellate District reversed the trial court’s decision, ruling that since Diaz was an at-will employee, the company was free to change the terms of Diaz’s employment so long as it notified her of whatever changes its making—which the company did at the staff meeting and subsequent private follow-up meetings. Further, the Second Appellate District noted that Diaz failed to show that the arbitration agreement cannot be enforced because no evidence was present that the agreement was of surprise or extremely unjust. The panel stated, “the uncontradicted evidence in this record demonstrates that Diaz maintained her employment status between Dec. 2 and Dec. 23, and remained an employee at the time of the hearing in this case…As a result, she was already bound by the arbitration agreement before the presentation of the letter indicating both her rejection of the agreement and her intent to remain employed.”
COUNSEL TO MANAGEMENT:
This decision is a win for employers and highlights the importance of not only valid arbitration agreements but how employers implement these agreements. Arbitration agreements continue to be a tool used for the benefit of employers and employees by reducing the cost of litigation through the court system and allowing for resolution through a quicker and generally less painful arbitration process. Should you have any questions about rolling out arbitrations agreement at your company or the enforceability of your current arbitration agreement, contact the experts at The Saqui Law Group, a Division on Dowling Aaron Incorporated.
Meal Period Refresher with Unsupervised Employees
As many of you know, under California law, non-exempt employees must receive a thirty (30) minute meal period if the employee works more than 5 hours in a workday. Employees who work more than ten (10) hours in a workday must receive a second 30-minute meal period. Generally, the first meal period must be taken before the end of the 5th hour of work (i.e. if the employee is scheduled to start the workday at 6:00 a.m., the employee must take his or her meal period no later than 11:00 a.m. on the dot.) Keep in mind that if an employee works no more than 6 hours in a workday—then the employee and employer may mutually consent to waive the meal period. While many employees, especially in agriculture, are subject to direct supervision and it is somewhat easy to track those meal periods, what about employees that are unsupervised?
If a company has employees that are responsible for recording and submitting their own time to payroll, plaintiffs will often take the position that while they were physically recording their meal breaks, they are not actually taking their meal period. Thus, employers should consider the following options to combat unsavory plaintiffs and their counsel:
A. Constantly remind unsupervised employees of the company’s meal period policy and that the duty free 30 minutes must be taken in accordance with that policy in regularly scheduled meetings that are recorded with an attendance sheet. These can be brief 5 minute meeting that take place at the beginning of the shift.
B. A warning (verbal or written) disciplinary notice documenting that the employee has been not taking meal or rest breaks and has been reminded of company policy and the requirement to comply. Keep in mind the practical impact and that discipline can often negatively impact morale.
C. Alternatively, if the employer feels like they have exposure here from continued violations it can opt to compensate those employees “premium pay”, which is one hour of the employee’s regular rate of pay for each day the meal period is missed, late, or interrupted (meaning the employee was not able to take a duty-free meal break for a full 30 minutes). The premium pay must be separately itemized and clearly identified on the paystub. While potentially expensive, this essentially ends all exposure for missed meal and/or rest periods.
Overtime and 7th Day Refresher
As we previously reported here and here, under the California Labor Code, employers cannot “cause” their employees to work more than 6 days in every seven. In Nordstrom v. Mendoza, the court found that an employer “causes” its employee to go without a day of rest if it “induces” the employee to do so. An employer does not violate the requirement by permitting an employee, who is fully apprised of their right to rest, to independently choose to work. Put another way, an employer does not violate the law if they tell employees they are entitled to the day of rest, and is neutral about whether the employee decides to take the day off or not such as through voluntary sign-up sheets.
Keep in mind that as of this year, an employee of agricultural employers under Wage Order No. 14 with 26 or more employees will be entitled to overtime compensation when working over 9.5 hours in a workday or 55 hours in a workweek. Wage Order No. 14 section 3(A)(1) states that if an employee works rather than rests on the 7th consecutive day within an employee’s workweek, the first 8 hours are paid at the overtime rate (one and half times the employee’s regular rate of pay) for all hours worked regardless of whether or not they have hit the overtime weekly threshold of 55 hours. After 8 hours of work on the 7th day, all time is paid at the employee’s double time rate (two times the employee’s regular rate of pay).
Those employers who choose to permit employees to volunteer to work on a 7th day should consider the use of a “Voluntary Employee Sign-Up Sheet” BEFORE working in order to work on that 7th day and should consult with legal counsel regarding the adoption of additional policies to ensure compliance with the law.