In Hasty v. American Automobile Association of Northern California, Nevada & Utah, Case No. C097674, a former employee sued his employer for race discrimination, disability discrimination, harassment, wrongful termination, and retaliation. The employer attempted to move the matter to arbitration under an Arbitration Agreement that the employee signed at the inception of his employment, but the trial court denied that motion, finding that the agreement was procedurally and substantively unconscionable. The employer appealed that ruling and the California court of appeal affirmed it. In supporting its decision, the court of appeal found that the agreement contained problematic provisions, making it substantively unconscionable, and that it was presented by the employer for electronic acknowledgment in a manner that the court deemed insufficient, making it procedurally unconscionable.
There were four problematic provisions: (1) the agreement contained an overly broad confidentiality clause, (2) the agreement’s waiver of all individual and nonindividual claims under California’s Private Attorneys General Act (PAGA) was unconscionable; (3) the agreement was overly broad in requiring the parties to waive their right to “any remedy of relief” resulting from a charge or complaint before a government agency; and (4) the agreement provided a link to the arbitration rules on a third party website, but the link no longer worked.
The court focused on the employer electronically distributing the agreement as the basis for finding that it was procedurally unconscionable. The employee had reviewed the onboarding documents on a smartphone with a small screen that may have made it difficult to read the document. Also, the employee had to click on an icon to view the arbitration agreement and could record his signature by click on “I agree”, without ever accessing the actual document.
It is always important to know what you are signing. Arbitration is oftentimes a less favorable forum for employees bringing employment-related claims against employers. Accordingly, employees should be cautious when presented with an arbitration agreement and may want to decline entering such agreements when possible or, where it is a condition of employment, consider stating in writing to their employer that they are only signing the agreement because it was a condition of employment, and they would not otherwise sign given the option.
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