AGREEMENT TO ARBITRATE-CONTINUED EMPLOYMENT AFTER FAILURE TO SIGN

Mar v. Perkins, 102 Cal. App. 5th 201

In 2013, plaintiff Mar joined Sierra Constellation Partners as a partner and employee. In 2020, Sierra’s HR director provided an employee handbook to Mar that contained signature blocks for both receipt of the handbook and assent to a separate arbitration agreement. Mar immediately advised the director that he would not sign either document. When the director advised Mar that execution of both agreements was a condition of employment, Mar told the director that Sierra could terminate him. It did not. In 2022, Mar resigned from the partnership and sued Sierra and his former partner for failing to pay him a buyout contained in the partnership agreement. The defendants moved to compel arbitration. The motion was denied. The defendants appealed, relying on Asmus v. Pacific Bell, 23 Cal. 4th 1 (2000) and DiGiacinto v. Ameriko-Omserv Corp. 59 Cal. App. 4th 629 (1997), where arbitration agreements were enforced because the plaintiff continued to work for the employer, notwithstanding failure to sign the arbitration agreement.

The Court of Appeal affirmed. In both Asmus and DiGiacinto the employees objected to the new terms of employment (loss of the employment security policy in Asmus and lower pay in DiGiacinto), yet the Supreme Court and the Court of Appeal concluded the employees were bound by the modified employment agreements because of their continued employment. A key factor in those cases was that the consideration for the new implied-infact agreement was the ability of the employee to continue to work for the company. In DiGiacinto, the employer reduced the employee's job responsibilities to save his job, In Asmus, the employer provided a generous pension program for its managers. Thus, the employees' continued employment was acceptance of the new consideration offered with the proposed modified employment terms.

Here, the defendants relied on Mar's conduct in remaining employed at Sierra as evidence of his assent to the arbitration agreement. But Mar's intent to arbitrate cannot be implied given his explicit and immediate rejection of the arbitration agreement. Where an employee promptly and unequivocally rejects an arbitration agreement as a modified term of employment, mutual assent to arbitrate is lacking. If Sierra did not want Mar to continue his employment without an arbitration agreement, it had a simple remedy—to terminate him. It did not.