California Court of Appeal Enforces Employment Arbitration Agreement Despite Multiple Onboarding Documents
Employers often use more than one onboarding document to explain arbitration, class action waivers, confidentiality duties, and related employment policies. That approach can create risk when the documents are not perfectly coordinated. But a recent published California Court of Appeal decision shows not every inconsistency will defeat an arbitration agreement.
In Santana v. Studebaker Health Care Center, LLC, the Court of Appeal reversed a Los Angeles County Superior Court order denying an employer’s motion to compel arbitration. The trial court had found the employer’s onboarding documents contained too many inconsistencies to establish mutual assent and, alternatively, concluded the arbitration agreement was unconscionable. The Court of Appeal disagreed. It held the parties had clearly agreed to arbitrate employment-related disputes, and the few ambiguities in the documents did not invalidate that agreement.
The decision is useful for California employers because it addresses several recurring issues in employment arbitration agreements: multiple related documents, class and collective action waivers, PAGA carve-outs, FAA language, arbitrator-selection procedures, confidentiality agreements, and severability.
The Employee Signed Three Arbitration-Related Documents
J. Asencion Santana worked at a skilled nursing facility. Studebaker Health Care Center purchased the facility in January 2023 and became Santana’s employer. As part of Studebaker’s onboarding process, Santana signed three arbitration-related documents: a “California Mutual Dispute Resolution Agreement,” an “Alternative Dispute Resolution Policy,” and an “Agreement to Be Bound by Alternative Dispute Resolution Policy.”
The Court of Appeal treated the three documents together because they were signed at the same time and concerned the same subject. That approach is consistent with California Civil Code section 1642, which allows related contracts made as part of the same transaction to be construed together.
Each document reflected an agreement to arbitrate employment-related disputes. The documents covered claims such as wrongful termination, discrimination, harassment, retaliation, breach of contract, wage and hour violations, failure to pay minimum wage, overtime, meal and rest period claims, wage statement claims, waiting time penalties, expense reimbursement claims, and claims arising from the employment relationship. The documents also contained class or collective action waivers, while addressing representative claims under the Private Attorneys General Act, commonly known as PAGA.
Santana also signed a confidentiality agreement. That document prohibited disclosure of confidential information and trade secrets and contained language allowing Studebaker to seek equitable relief in court for threatened or actual breaches.
The Lawsuit and the Trial Court’s Ruling
After leaving employment, Santana filed a wage-and-hour class action against Studebaker in May 2024. The lawsuit alleged Labor Code claims for failure to pay minimum wage, failure to pay overtime, failure to provide meal and rest periods, failure to reimburse necessary expenditures, inaccurate wage statements, failure to pay final wages, and a PAGA claim. Santana also alleged an unfair business practices claim under Business and Professions Code section 17200.
Studebaker moved to compel arbitration of Santana’s individual claims, including his individual PAGA claim, and sought enforcement of the class action waiver. Studebaker argued the Federal Arbitration Act applied, the individual claims belonged in arbitration, and the non-individual PAGA claim should be stayed while the individual arbitration proceeded.
Santana opposed the motion. He argued the arbitration documents contained conflicting and ambiguous terms, so there was no enforceable agreement to arbitrate. He also argued the agreement was unconscionable because it included an unenforceable PAGA waiver and, when read together with the confidentiality agreement, unfairly favored the employer.
The trial court denied the motion. It found the various documents contained too many inconsistencies to show mutual assent. It also found the agreement procedurally and substantively unconscionable and declined to sever the challenged provisions.
The Court of Appeal Saw Ambiguity, Not No Agreement
The Court of Appeal reversed.
The appellate court emphasized a basic contract principle: arbitration depends on agreement. But the existence of ambiguity does not automatically destroy a contract. Courts generally try to interpret contracts in a way that makes them lawful, definite, reasonable, and capable of being carried out when that can be done consistently with the parties’ intent.
That distinction drove the decision. The trial court treated inconsistencies as showing no meeting of the minds. The Court of Appeal saw something different: the documents may have contained some ambiguities, but they all pointed in the same central direction. The employee and employer agreed to arbitrate employment-related disputes.
For employers, this is the first practical lesson from the case. Drafting inconsistencies are dangerous, but the key question is whether the inconsistency goes to the existence of the agreement itself or to a subsidiary issue courts can resolve through contract interpretation.
The FAA Language Was Sufficient
One issue was whether the Federal Arbitration Act applied. The Court of Appeal found the documents plainly and unambiguously provided the FAA applied.
The California ADR agreement stated arbitration would proceed under and be governed by the FAA because the employee and company were engaged in interstate commerce. It also said California arbitration procedures would apply only to the extent they were not contrary to the FAA. Another document similarly recognized the agreement involved interstate commerce and stated arbitration would be governed by the FAA. The ADR policy did not use identical language, but it referenced post-award court proceedings under the FAA, if applicable, and/or applicable state law.
The Court of Appeal held these provisions did not conflict. They were not identical, but they were compatible.
That point is significant because FAA coverage often affects PAGA arbitration issues after Viking River Cruises, Inc. v. Moriana and Adolph v. Uber Technologies, Inc. Where the FAA applies, an agreement may require arbitration of the employee’s individual PAGA claim, while the non-individual PAGA claim remains in court, often stayed pending arbitration.
Different Arbitrator-Selection Procedures Did Not Defeat Arbitration
The documents also contained different language about how an arbitrator would be selected. One document contemplated selecting an alternative dispute resolution provider and using a strike process from a list of potential arbitrators. Another referred to the American Arbitration Association’s Employment Arbitration Rules and Mediation Procedures.
The Court of Appeal held this did not destroy the agreement. Both provisions assumed arbitration would occur. At most, they created a potential ambiguity about arbitrator selection. That kind of issue can be resolved later, including by court appointment of an arbitrator under Code of Civil Procedure section 1281.6 if necessary.
This is an employer-friendly part of the decision, but employers should not read it as permission to be casual. Different arbitration provider language, different rules, and different selection procedures can still create avoidable litigation. Studebaker ultimately prevailed, but only after losing in the trial court and taking an appeal.
The PAGA Waiver Problem Was Severable
The PAGA language was more complicated.
The Court of Appeal recognized California law prohibits a wholesale waiver of PAGA claims. Under Iskanian, as limited by Viking River and explained by Adolph, an employer generally cannot require an employee to waive the right to bring a PAGA action altogether. But where the FAA applies, an employer may require arbitration of the employee’s individual PAGA claim, while non-individual PAGA claims are treated separately.
Most of Studebaker’s documents handled this properly. They contained class and collective action waivers, but carved out non-individual PAGA claims or representative claims that could not lawfully be waived. One provision, however, went too far. It stated the employee was prohibited from “acting as a private attorney general” or representative of others. The Court of Appeal recognized this was a wholesale PAGA waiver and inconsistent with the other provisions.
The trial court treated that problem as a reason to invalidate the agreement. The Court of Appeal held the better approach was to sever the improper provision. The agreement contained severability language, and the offending provision did not undermine the parties’ broader agreement to arbitrate employment-related disputes.
For employers, this is one of the most important parts of the decision. A well-drafted severability clause can preserve an arbitration agreement when one provision goes too far. But severability is not a drafting strategy. Employers should still update PAGA language to reflect current law and avoid overbroad waivers.
Adhesion Created Some Procedural Unconscionability, But Not Enough
The Court of Appeal also addressed unconscionability.
The agreement was adhesive because Studebaker presented it on a take-it-or-leave-it basis during onboarding. That created some procedural unconscionability, as employer-drafted arbitration agreements often do. But the Court of Appeal rejected the trial court’s finding of a high degree of procedural unconscionability.
The Court of Appeal distinguished Olvera v. El Pollo Loco, Inc., where the employer’s materials were misleading because a bilingual summary suggested mediation, while the actual English-only policy required binding arbitration. In Santana, the Court of Appeal found no similar deception or misleading presentation. The documents were not perfectly coordinated, but they were not deceptive in the way the documents were in Olvera.
This distinction is important. Adhesion alone usually does not make an arbitration agreement unenforceable. The analysis becomes more serious when the employer’s process includes surprise, deception, hidden terms, confusing translations, misleading summaries, or terms employees cannot reasonably understand.
The Confidentiality Agreement Did Not Make the Arbitration Agreement One-Sided
Santana also argued the confidentiality agreement made the arbitration arrangement substantively unconscionable because it allowed Studebaker to seek relief in court.
The Court of Appeal rejected that argument. It explained employers may have a legitimate commercial need to protect confidential information and trade secrets. A provision allowing an employer to seek appropriate equitable relief in court for confidentiality violations is not automatically unconscionable.
The court compared Studebaker’s confidentiality agreement with cases where courts found broader provisions unconscionable. Studebaker’s agreement did not require Santana to concede any breach would automatically cause irreparable harm. It did not say Studebaker was automatically entitled to an injunction. It did not waive a bond requirement. It did not eliminate Studebaker’s burden to prove the elements needed for injunctive relief. Instead, it allowed Studebaker to seek whatever equitable relief a court found appropriate.
The Court of Appeal also harmonized the confidentiality agreement with the arbitration documents. Studebaker still had to arbitrate employment-related claims against Santana, including breach of the confidentiality agreement. But Studebaker could seek equitable relief, such as an injunction, in court.
This is a useful drafting point. Employers should avoid confidentiality language that says an employee agrees any breach automatically causes irreparable harm, waives bond, consents to immediate injunctive relief, or otherwise strips away the normal showing required for an injunction. Narrow language preserving the right to seek appropriate equitable relief is safer.
Practical Takeaways for Employers
The result in Santana favored the employer, but the path to that result was expensive and uncertain. The employer won because the Court of Appeal was willing to read the documents together, resolve ambiguities through contract interpretation, sever the improper PAGA waiver, and distinguish the confidentiality agreement from more one-sided provisions.
Employers should not rely on appellate courts to clean up onboarding documents after the fact. Arbitration agreements should be reviewed as a complete package. The main agreement, policy, acknowledgment, employee handbook, confidentiality agreement, and any standalone class or PAGA waiver should use consistent language.
Employers should confirm the documents identify whether the FAA applies, define covered claims consistently, include lawful class and collective action waiver language, preserve non-waivable PAGA rights, address individual PAGA arbitration consistent with current law, include a severability clause, and avoid overreaching confidentiality remedies.
The decision also underscores a broader point about arbitration litigation in California. Courts remain willing to enforce employment arbitration agreements, including adhesive agreements, when they reflect a clear mutual agreement to arbitrate and do not impose unfairly one-sided terms. But poorly coordinated documents can give employees substantial arguments against enforcement, even if those arguments ultimately fail on appeal.
Conclusion
Santana v. Studebaker Health Care Center, LLC is a practical reminder that arbitration agreements do not need to be perfect to be enforceable. Ambiguity is not the same thing as no agreement. A defective provision is not always fatal when the agreement contains a severability clause and the parties’ central intent to arbitrate is clear.
For California employers, the better lesson is preventive. Review the entire onboarding packet as one integrated contract system. Make sure the arbitration agreement, ADR policy, acknowledgment, handbook, PAGA language, class waiver, confidentiality agreement, and injunctive relief provisions work together. That kind of drafting discipline can reduce the chance an arbitration agreement becomes the subject of the very litigation it was intended to avoid.
Santana v. Studebaker Health Care Center, LLC was filed on April 7, 2026, certified for publication on April 22, 2026, by the California Court of Appeal, Second Appellate District, Division Seven, Case No. B343640.