The California Supreme Court recently confirmed that an arbitration agreement’s formatting alone doesn’t make an agreement substantively unconscionable. In this case, the employer provided the agreement in dense, very small font text that was included in an employment packet. That dense, small font was not enough to make the agreement unenforceable, unless the actual contract terms were unfairly one-sided or unduly harsh. However, there were also multiple separate confidentiality agreements executed after the initial agreement, raising questions of whether those were consistent or not.
A few takeaways from this:
- It’s important to be sure that all documents that related to arbitration be consistent so there isn’t conflicting language;
- Substantively unfair terms will be subject to scrutiny, so shouldn’t be included unless reviewed by employment law counsel;
- Agreements should be provided as a stand-alone document (not imbedded, for example, in an Employee Handbook) and drafted to be consistent with all other company policies that refer to or relate to arbitration.
We provide an arbitration agreement that’s reviewed regularly for our employment law attorney, but clients using their own should ensure regular review and updating to be sure it’s enforceable. If we are provided with this agreement, we can include it in employee’s onboarding for those clients we manage onboarding for.
