By William Stein

In rolling out arbitration policies, retail employers should heed the recent California Court of Appeal decision Gorlach v. The Sports Club Co. That case gives employers reason to be cautious when asking employees to sign agreements requiring them to arbitrate any disputes arising out of their employment.  In that case, the trial court found the former Director of Human Resources, who was responsible for obtaining employees’ signatures on a mutual agreement to arbitrate claims, intentionally misled the company into believing that had signed the agreement when she had not.  Nevertheless, it denied the company’s motion to compel.  The Court of Appeal affirmed, holding that, even though she misled the company, she was not bound by the arbitration agreement because she did not sign it. Human Resources.jpg

The Court of Appeal decision is a cautionary tale for all retail employers that require their employees to sign arbitration agreements.  It emphasizes that retail employers should have procedures in place to make sure that employees sign arbitration agreements.  But it requires employers to have to go a step further: they must also have safeguards in place to make sure that those in charge of collecting such signatures also sign the agreement.  If not, such employees, even if they are members of the executive team, can mislead their employers into believing that they have signed the arbitration agreements and still not be required to arbitrate claims arising out of their employment.