A confidentiality agreement, signed by an employee at the same time as an arbitration agreement that treated “compensation and salary data and other employee information” as a supposed “trade secret” that the employee could be enjoined from discussing, rendered the arbitration agreement substantively unconscionable and unenforceable. Alberto v. Cambrian Healthcare, 308 Cal.Rptr.3d 320 (2023).
When the plaintiff employee was hired, the defendant’s employer gave her three documents to sign: an arbitration agreement, a confidentiality agreement, and a confidentiality agreement addendum. The employee signed all three. The arbitration agreement was signed by the employee, but the signature block for the employer’s representative was left blank. The confidentiality agreement stated that the employee was not allowed to disclose “trade secrets,” which were defined to include “compensation and salary data and other employee information.” The confidentiality agreement also requires the employee to acknowledge that unauthorized use or disclosure of the employer’s proprietary information “would cause irreparable injury to the Company” and to “consent to the order of an immediate injunction, without bond, from any court of competent jurisdiction, enjoining and restraining” employee from “violating or threatening to violate” the agreement. The confidentiality agreement also shifted attorney’s fees and costs to the non-prevailing party.
The trial court denied the employer’s motion to compel the employee’s wage and hour claims against the employer, finding that the employer’s failure to sign the arbitration agreement meant that the parties had not formed an agreement to arbitrate. It also found that, even if an agreement had been formed, the arbitration agreement was unconscionable and unenforceable. It found (1) that the confidentiality agreement was part of the same transaction as the arbitration agreement; (2) that the confidentiality agreement’s prohibition on discussing salary information was unconscionable; and (3) that the agreement’s wholesale waiver of PAGA claims was unconscionable and against public policy. The trial court denied the employer’s motion to compel arbitration, finding that the three problematic provisions could not be severed. The appellate court affirmed these findings.
This post is an advertisement. Any comments provided do not create an attorney-client relationship.
