In Sparks v. Vista Del Mar Child & Family Services, ___ Cal.App.4th ___ (2012), the Second District Court of Appeal affirmed the trial court's decision to deny the employer's petition to compel arbitration on two grounds: (1) the employee never agreed to arbitrate because the acknowledgement of the handbook signed by the employee merely stated that the employee agreed to "read and understand" the handbook, and did not specifically provide that the employee agreed to be bound by its terms; and (2) the arbitration provision buried in the employee handbook was unenforceable and void.

According to the court, the employer's right to unilaterally modify the employee handbook at any time made the arbitration agreement illusory and in turn void. The Court further stated that the arbitration clause was unconscionable because: (1) it was buried in the employee handbook; (2) it was not subject to negotiation; (3) the employer failed to give the employee a copy of the American Arbitration Association's ("AAA") procedural rules which would govern any resultant arbitration; and because (4) the AAA procedural rules give the arbitrator the sole discretion to deny discovery and the arbitration clause itself did not set forth an express provision providing any discovery rights.

At bottom, California employers who desire to have their employees arbitrate employment related claims should have their present arbitration agreements and/or clauses reviewed by counsel to ensure that they are properly written so as to be enforceable in light of the Court's ruling in Sparks. Employment related arbitration clauses should at the very least: (1) be presented in a stand alone agreement; (2) set forth an express clause providing for discovery; and (3) have the procedural rules of the forum (AAA, JAMS, Etc..) attached for the employee's review. In addition, any "no contract" language, or language authorizing the employer to unilaterally change its policies or terms, should explicitly state that this does not apply to any agreements to arbitrate.