Every new hire faces a mountain of paperwork from Human Resources to sign on his/her first day of employment.  A frequent consequence of this "barrage of paperwork" is that one or two documents may be overlooked and not signed by the new hire.  If one of those documents happens to be an arbitration agreement, the California Court of Appeal ruled in Mitri et al. v. Arnel Management Co. et al. that the employer may not rely on handbook language that requires the employee to sign an arbitration agreement upon hire.

In Mitri, the plaintiffs sued their former employer and others for sexual discrimination and harassment, failure to prevent sexual discrimination and harassment, retaliation, invasion of privacy, and defamation.  The defendants immediately filed a motion to compel arbitration, contending that plaintiffs had executed an arbitration agreement with the company.  The trial court denied the motion because a signed copy of the agreement had not been produced to the court.  The court of appeal unanimously affirmed the lower court’s decision, noting that the documents presented to the court by the employer were not sufficient to prove the existence of a binding agreement to arbitrate.  Instead, the employer’s handbook arbitration provision "only placed plaintiffs on notice that they would be called upon to sign a separate binding arbitration agreement, thereby contradicting defendants’ argument the provision in the handbook and subsequent performance constituted a unilateral contract of binding arbitration."

Although the Mitri court distinguished several cases that had upheld arbitration policies that did not require employee signatures, this case should serve as a reminder to all California employers that their Human Resources personnel must carefully ensure that all new hire documents are actually signed and executed by all employees.  Audits of employee files are a recommended "best practice" to prevent such a scenario from occurring in your business.