Ambiguity in Employment Contracts

Where an employment contract is ambiguous, it will be construed most strongly against the party preparing it or employing the words concerning which doubt arises. This rule applies to contracts prepared by the employer, or by the employer’s representative such as his or her attorney.

RKO Radio Pictures v. Sheridan, 195 F.2d 167: Where employer drafted employment contract, employer was responsible for any ambiguity created by its use of language, and such ambiguous language was construed strictly against employer.

Goddard v. South Bay Union High School District (1978) 79 Cal.App.3d 98, the court stated: An employment contract between a school district and an employee is in essence a contract of adhesion and therefore will be construed against the school district.” Applying this principle, the court construed an ambiguous board regulation against the board. An adhesion contract is a contract in which the party with superior bargaining power permits the other party to adhere to the contract or reject it, but does not permit an opportunity to bargain over its terms. (Neal v. State Farm Ins. Co.(1961) 188 Cal.App.2d 690, 694, 10 Cal.Rptr. 781.)

One who is hired under such a contract has no opportunity to bargain for a change in the language of the document; hence, any ambiguous provision should be resolved against the draftsman and in favor of the other party. (Frates v. Burnett, 9 Cal.App.3d 64, 70; 87 Cal.Rptr. 731; Hamilton v. Stockton Unified Sch. Dist. (1966) 245 Cal.App.2d 944, 952, 54 Cal.Rptr. 463.) The rule of resolving ambiguities against the drafter “does not serve as a mere tie breaker; it rests upon fundamental considerations of policy.” (Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 871, 27 Cal.Rptr. 172, 178, 377 P.2d 284, 290.)

While the clear weight of the case law favors the employee, whether or not an employment contract is actually ambiguous is often a more difficult matter to appraise.