May 2025

Most employees in California are not employed under a written contract.  Rather, the employees are “at-will,” meaning the employee or the employer can end the employment relationship at any time, with or without cause.  Even if most employees do not have a written employment contract, many will still enter into various contractual relationships with their employers.  These agreements include arbitration agreements, trade secrets/non-disclosure agreements, commission agreements, and on-call meal break agreements, to name just a few. 

Although there is an existing relationship between the employer and employee, contracts in the employment relationship must still follow many of the same formalities as any other contract.  For example, the agreement must include “consideration,” which is the benefit that each party to the contract receives. For the employee, the benefit is continued employment. For the employer, it might be that disputes are moved to a lower cost setting such as arbitration, or that the employee must maintain the company’s trade secrets. 

In the recent case of Pich v. LaserAway LLC, the employer learned the hard way that failing to follow the formalities of contracts can be costly.  In Pich, the plaintiff brought a wage and hour class action lawsuit against the employer.  The employer attempted to compel arbitration based on an arbitration agreement that the employee signed at the start of employment.  The trial court denied the motion to compel, and the appellate court affirmed. Both courts found that the arbitration agreement was not enforceable because the employer simply failed to sign the agreement.

The Pich court noted that some courts have enforced arbitration agreements when the employer did not sign the agreement.  But the agreement by LaserAway contained language binding the company as well as the employee, such as “[t]he company and I understand and agree that, by signing this Agreement, we are expressly waiving any and all rights to a trial before a judge and/or a jury.”  Because the agreement, by its terms, required a company representative’s signature, the failure to sign made the agreement unenforceable.  Had the employer simply signed the arbitration agreement, it likely would have been enforceable.

Arbitration agreements and other employer/employee contracts are often presented to employees at the start of employment as a package of onboarding documents.  Once signed, it is common for these agreements to get filed away in a personnel file and forgotten about until a situation arises where they are needed. The routine nature of these agreements can lead employers to overlook even the simplest steps such as signing the agreements.

To help ensure that contracts with employees are enforceable, employers should consider the following:

• Have a designated representative sign all agreements. Consider presenting the agreements to the employee pre-signed by the employer.
• Provide the employee with sufficient time to review the agreements before signing, including reviewing the agreements with an attorney of their choosing.
• Provide the employee with copies of all fully executed agreements.
• Have an attorney regularly review all employer/employee contracts. Update the agreements as needed and have employees (and the employer) sign all updated agreements. 

For more information contact:

Matthew Wallin

mwallin@gibbsgiden.com

(424) 317-4423

Matthew Wallin is a partner in the Westlake office where he practices labor and employment law.  He has extensive experience defending private business and public entities in litigation and advising clients on labor compliance issues.  

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