Enforcing Electronically Acknowledged Arbitration Agreements in California

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As the demand for a hybrid work environment increases, so do the risks associated with check-box acknowledgements for California employers. Tech companies have long been known for hybrid flexibilities, and are well advised to be mindful of a recent California Court of Appeals decision regarding the enforceability of arbitration provisions included only in an employee handbook. In Trinity v. Life Insurance Company of North America, the employer distributed the employee handbook via email to employees, with copies available in their online portal. An arbitration agreement was included in the last few pages of the 44 page handbook, while the last two pages contained the acknowledgement and agreement section. The Agreement was a mandatory and nonnegotiable barrier to employment. To accept the handbook provision, employees had to click a check-box and click “done.” Completion triggered a confirmation email to the employee; meanwhile, the company could retrieve an internally generated report. The plaintiff employee was fired, and filed a lawsuit alleging various employment claims. The employer attempted to compel arbitration based on the handbook provision. The employee claimed to have never acknowledged the provision or agreed to arbitrate. The company could provide the report that reflected that she had completed it, but could not provide her confirmation email. Without the email confirmation, the company could not prove that the employee had accessed and acknowledged the handbook provision. This faulty recordkeeping was key evidence against the company. Ultimately, this lack of documentation resulted in the Court of Appeals agreeing with the trial court that the evidence did not compel a finding that the employee agreed to arbitrate her claims, and affirmed the denial of the motion to compel arbitration.

Services such as DocuSign provide copies of documents to both parties upon signing, which can provide supportive documentation to employers attempting to enforce arbitration clauses included in handbooks or other onboarding documents. If feasible, requiring confirmation emails to be forwarded to the employer would confer a baseline of protection. Otherwise, if the check-box style is chosen, requiring a check-box and acknowledgement specific to the arbitration provision would bolster an employer’s argument that the parties agreed to arbitration. For example, emphasizing the agreement a second time supports an argument that the employee understands the agreement. Lastly, the ease of an employee’s access to the agreement after it is signed can support acknowledgment and understanding of the provision. Maintaining a portal containing all agreements can preserve transparency between an employer and employee, and support enforceability of the arbitration agreement.

Miller Nash summer associate Sofia McDonald contributed to this article.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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