Following the decision by the United States Supreme Court on May 21, 2018 in Epic Systems Corporation v. Lewis (read blog here) that class action waivers in mandatory arbitration agreements do not violate the National Labor Relations Act, more employers may now want to use arbitration agreements with their employees. For those considering arbitration agreements and those with agreements already in place, the decision of July 3, 2018 in Juarez v. Wash Depot Holdings by the California Court of Appeal is important.
An hourly employee filed a wage and hour lawsuit alleging 13 causes of action against his employer. The employer filed a motion to compel arbitration based on its arbitration policy. The arbitration agreement appeared in the employee handbook under “Dispute Resolution Agreement.” The court examined the following provisions in the handbook and arbitration policy:
- “There will be no right or authority for any dispute to be brought, heard or arbitrated as a private attorney general action.” (This was a reference to the California law called the Private Attorneys General Act or “PAGA”)
- The English-language version of the handbook’s statement that the PAGA waiver was severable from the arbitration agreement in the event the court found the waiver unenforceable.
- The Spanish-language version of the handbook that stated the PAGA waiver was not severable from the arbitration agreement.
- “This Handbook may be translated into languages other than English as a convenience to our employees. Any ambiguity between this Handbook and any translated version will be governed by the English version.”
The plaintiff signed two acknowledgments, one in the Spanish language and one in the English language, stating that he received the handbook and agreed to its terms. He also signed a separate acknowledgement in the Spanish language stating that he received a copy of the dispute resolution agreement.
In opposing the motion to compel arbitration, the plaintiff claimed that his employer did not provide him with either version of the employee handbook and that he was not informed of, nor was he aware of, the arbitration policy.
The Court’s Findings
The court found the arbitration agreement unenforceable in part because of the difference in the English and Spanish translations, as noted above.
Regarding the translation discrepancy, the Court found “[a]t best, the difference in the severability clauses in the English-language and Spanish-language versions of the handbook is negligent; at worse, it is deceptive.” The difference in the translation made the arbitration agreement ambiguous and such ambiguity was construed against the employer because in California, it is a well established rule that any ambiguities must be construed against the employer and in favor of the employee.
- Submit Your Arbitration Agreement for Review. If you have an arbitration agreement, we recommend submitting the arbitration agreement for review by qualified employment law counsel to ensure it complies with current law. Whenever possible, you should have legal counsel who understands the language of the translated document review the document and identify any potential issues with the arbitration agreement.
- Certified Translation Services. We recommend employers retain a certified translation service with experience translating legal documents rather than, for example, relying on a Spanish-speaking employee to translate agreements. If possible, all employee policies should be translated by certified translators.
- Provide a Copy of the Handbook to the Employee. It may increase printing costs, but employers should give serious consideration to providing employees with a physical copy of the employee handbook before signing the acknowledgment form.
- Update Your Handbook. We recommend submitting your employee handbook for an annual review by qualified legal counsel to ensure the handbook reflects current law. This includes arbitration agreements – the law governing arbitrations has changed in recent years and is likely to change again from time to time in the future.
- Maintain a Separate Arbitration Agreement. While referencing dispute resolution policy in the handbook is fine, any agreement the employer wishes to enforce should be separate from the handbook and separately signed by the employee.
- Sign up for our Wage and Hour Webinar. Sutton Hague Law Corporation will discuss arbitration agreements among many other topics during its live and interactive webinar covering various wage and hour topics on September 19, 2018 from 8:00am to 1:00pm (PT) for California employers and on September 20, 2018 from 8:00am to 12:00 pm (PT) for Nevada employers. To register, click here.