On April 10, 2019, the 2nd District Court of Appeal (California) ruled that when a worker continues employment after being notified by his/her employer that an agreement to arbitration is a condition of continued employment, that employee has impliedly consented to the arbitration agreement. This California decision provides important guidance to employers relating to litigation exposure and liability.
In reversing the lower court, the Court of Appeal ruled that an employer can unilaterally change the terms of an at-will worker’s employment agreement as long as the following occurs:
1. The employer provides notice of the change, and
2. The alteration does not violate a statute or breach an implied or express contractual agreement.
The court therefore ruled that an “adhesive” agreement to arbitrate can still be enforced so long as there is no evidence of surprise or sharp practice which demonstrates that the agreement is substantively unconscionable.
The case is Diaz v. Sohnen Enterprises and a copy of the Court of Appeal decision can be accessed here.
Please contact us if you would like to discuss how these new laws may affect your business.