At-Will Nature of Employment Allowed Employer To Introduce New Policies Without A Signed Writing
At first, we were going to file this unpublished opinion under “go figure”, but we think we get it. In 2003, employee Krishna Papudesi, a systems analyst with Northrop, signed an integrated employment contract with her employer having no ADR provision whatsoever. The 2003 Agreement provided it “may not be superseded, amended, or modified except by written agreement signed by me and by an officer of the Company.” After the employee filed a class action wage and hour lawsuit against the employer, the employer petitioned to compel arbitration, based on a 2006 employment policy requiring arbitration of disputes. The trial court denied the petition, finding that the 2006 employment policy requiring arbitration was not a valid modification of the original employment contract. Employer appealed the denial of its petition to arbitrate. Papudesi v. Northrop Grumman Corp., Case No. B235730 (2nd Dist. Div. 1 Nov. 29, 2012; modified Dec. 4, 2012) (Chaney, J.) (unpublished).
The Court of Appeal reversed the order denying the employer’s petition to compel arbitration, concluding that “the arbitration policy did not modify the original employment contract but constituted a separate agreement.” Does this mean that all that an employer needs to do to get around an integrated contract lacking an arbitration clause is circulate an employment policy requiring arbitration of disputes? We don’t think it’s that easy.
The 2003 agreement covered (a) the at-will nature of Papudesi’s employment and (b) her obligation to comply with Northrop’s policies. The Court of Appeal, however, held that, “nothing prohibited Northrop from introducing new policies without a signed writing.” Thus, point one is that introducing a new policy pertaining to ADR was outside the scope of integration.
In addition, the Court of Appeal emphasized the “at-will” nature of the employment: “Northrop was therefore entitled to alter the terms of her employment by instituting new policies as it saw fit.” That’s point two. But query: if Papudesi had not been an at-will employee, would a separate agreement still have been outside the scope of the integration?. Does the decision turn entirely on the fact that Papudesi was an at-will employee?
Because Papudesi continued her employment with Northrop, she thereby accepted the 2006 arbitration provision.
Concluding that Northrop’s arbitration policy constituted an agreement that was “separate from and independent of Papudesi’s employment contract,” and that it was not unconscionable, the Court of Appeal remanded to determine if the “class action waiver provision may yet be unenforceable under Gentry [42 Cal.4th 83].”