An employee handbook stating a company policy requiring employees to sign an arbitration agreement does not constitute an enforceable arbitration agreement on its own, even if signed by the employee, according to a California state appellate court.

In Mitri v. Arnel Management Co., No. G038003, 2007 WL 4328443 (Cal. Ct. App. Dec. 12, 2007), Arnel Management sought to compel arbitration of former employees' sexual discrimination and harassment claims. In its declarations, the company noted that the employees had received a handbook stating the company's arbitration policy and the employees subsequently acknowledged receiving the handbook by their signatures. The employees opposed the motion, denying that they entered into an arbitration agreement with Arnel, or that they had ever been asked to do so.

The Court held that Arnel had failed to establish the existence of a valid agreement to arbitrate, despite the distribution of the company's arbitration policy in the handbook and the employees' signed acknowledgement. The Court observed that the arbitration material and language in the handbook, although detailed, was merely a statement of the company's policy.

Also, the Court noted that the handbook recited the requirement that all employees are required to sign an arbitration agreement. To the Court, this language "undermine[d] any argument… the provision in the handbook itself was intended to constitute an arbitration agreement between Arnel and its employees." Instead, the language only provided the employees with notice that they would be asked at another time to sign an agreement embodied in a separate document.

Without any evidence of an actual agreement between the parties outside of the handbook acknowledgement, the Court refused to compel arbitration of the employees' claims.