In Morales v. Superior Court of San Diego County (Cal. Ct. App., Aug. 3, 2026) 2026 WL 2224700, California’s Fourth District Court of Appeal addressed a foundational arbitration question: when an employment agreement only requires arbitration of disputes about the agreement itself, does that cover FEHA, CFRA, and Tameny wrongful termination claims?
The court answered no. Issuing a writ of mandate, it directed the San Diego County Superior Court to vacate its order compelling arbitration and to deny SDG&E’s motion.
What Happened
Sylvia Morales worked for San Diego Gas & Electric Co. for nearly 20 years. After SDG&E terminated her employment in September 2024, she sued for wrongful termination based on FEHA disability discrimination, failure to accommodate, failure to engage in the interactive process, CFRA retaliation, and a common-law Tameny claim for termination in violation of public policy.
SDG&E moved to compel arbitration based on documents Morales signed when she was hired in 2005, including an Employment, Confidential Information, and Invention Assignment Agreement. The superior court granted the motion. Morales sought writ review.
The Arbitration Language
The operative agreement required arbitration of “[a]ny dispute regarding any aspect of this Agreement or any act which allegedly has or would violate any provision of this Agreement.” It also contained a merger clause stating that the Agreement was the entire understanding relating to its subject matter.
Unlike many employment arbitration clauses that expressly cover disputes “related to,” “arising out of,” or “having any connection with” employment, this provision was tied to the agreement’s own terms and alleged violations of those terms.
What the Court of Appeal Held
The Court of Appeal granted the petition. Key holdings include:
- The merger clause controlled. The later formal Agreement superseded the earlier offer/acceptance arbitration language on the types of disputes the parties agreed to arbitrate.
- The clause was narrow. It covered disputes about an aspect of the Agreement or alleged violations of the Agreement—not every employment-related claim.
- FEHA, CFRA, and Tameny claims were outside the clause. Morales did not challenge the Agreement’s at-will language or allege that SDG&E breached the Agreement. Her claims rested on unwaivable statutory rights and public policy that exist independent of the employment contract.
- Ambiguities cut against the employer. Because SDG&E drafted the adhesive agreement, any ambiguity had to be construed against the drafting employer and in favor of the employee.
The court distinguished cases like Armendariz and Little, where the arbitration agreements clearly required arbitration of FEHA or Tameny claims. Here, the threshold question was whether the parties agreed to arbitrate those claims at all.
Why This Matters
Many California employers still use older offer letters and invention/confidentiality agreements with arbitration language limited to disputes “regarding” the agreement. Morales confirms that such wording is not the same as a broad employment-dispute arbitration clause.
For employees asserting FEHA discrimination, CFRA leave retaliation, or wrongful termination in violation of public policy, the precise arbitration language can determine whether the case stays in court.
Practical Takeaways
- Read the exact arbitration wording. “Regarding any aspect of this Agreement” is materially narrower than “any dispute related to employment.”
- Statutory FEHA/CFRA claims and Tameny claims often arise independently of the employment contract and may fall outside a narrow agreement-based clause.
- Employer-drafted ambiguities are construed against the employer.
- Employers who want broad arbitration coverage generally need clear language covering employment-related statutory claims—not just disputes about the agreement’s terms.
If your employer is trying to force a wrongful termination or discrimination case into arbitration, the wording of the agreement matters. Contact Jonny Law to discuss your situation. This post is general information only and is not legal advice about any specific case.
Case: Morales v. Superior Court of San Diego County, No. D087448 (Cal. Ct. App., 4th Dist., Div. 1, filed Aug. 3, 2026) 2026 WL 2224700. Read the court opinion (PDF).
