Arbitration
Employment Agreement Too Narrow to Compel Arbitration of FEHA Claims
In Morales v. Superior Court, the Fourth District Court of Appeal held that an arbitration provision limited to disputes about the parties’ employment agreement did not compel arbitration of a terminated employee’s statutory and public-policy claims. The court granted a writ of mandate directing the trial court to vacate its order compelling arbitration and to deny the employer’s motion. The opinion was certified for publication.
Background
Sylvia Morales worked for San Diego Gas & Electric Company (SDG&E) for nearly 20 years before the company terminated her in September 2024. She sued for wrongful termination, relying on the Fair Employment and Housing Act (FEHA) and the California Family Rights Act (CFRA).
Morales alleged disability discrimination, a failure to accommodate, a failure to engage in the interactive process, and retaliation. Those statutory claims also grounded a common law claim for wrongful termination in violation of public policy under Tameny v. Atlantic Richfield Co.
SDG&E moved to compel arbitration, relying on arbitration language in documents Morales signed when she was hired in 2005. The trial court granted the motion, reasoning that because the agreement described her employment as at-will, any claim based on exceptions to at-will employment was a dispute regarding an aspect of the agreement.
What the Court Held on the Scope of the Clause
The Court of Appeal applied ordinary rules of contract interpretation and reviewed the question de novo. It first concluded that a later, integrated 2005 agreement—which contained a merger clause covering its subject matter—supplied the operative arbitration language.
That agreement required arbitration only of “[a]ny dispute regarding any aspect of this Agreement or any act which allegedly has or would violate any provision of this Agreement.” The court contrasted that wording with broader clauses reaching disputes “related to” or “in connection with” the plaintiff’s employment, which sweep in all employment-related claims.
Morales’s claims, the court reasoned, fit neither category. Her FEHA, CFRA, and Tameny claims did not turn on interpreting any term of the agreement and did not allege that either party violated it; they rested on unwaivable statutory protections and public policy that exist independent of the contract.
An arbitration clause limited to disputes regarding an aspect of the employment agreement, or acts that violate it, does not compel arbitration of FEHA, CFRA, and Tameny claims, which arise independent of the agreement.
Ambiguity and Construction Against the Drafter
The court added that even if the clause were ambiguous, that would not help the employer. California recognizes a presumption favoring arbitration, but there is no policy to compel arbitration of disputes the parties did not agree to arbitrate.
Because SDG&E drafted the agreement and presented it to a newly hired employee as a condition of employment, any ambiguity had to be construed against the drafter. The court issued a writ directing the trial court to deny the motion to compel and awarded Morales her costs.
What This Means for You
This decision clarifies that an arbitration clause confined to disputes about an employment agreement, or acts violating it, does not by its terms reach FEHA, CFRA, and Tameny claims. It turns on the specific wording of the clause and applies to disputes over whether such claims fall within an arbitration provision’s scope.
I write these summaries as general information about developments in California employment law. They are not legal advice and don’t create a mediator–client relationship. For guidance on a specific matter, consult a qualified attorney.