“Poorly Written Arbitration Agreement Was Not Enforceable”

Attorney Joanne Deschenaux has authored this article, available at SHRM.org, discussing the California Court of Appeals decision in Hasty v. American Automobile Association of Northern California, Nevada & Utah.

As the article explains, the appellate court deemed an arbitration agreement between the defendant association and an employed insurance sales agent to be both procedurally and substantively unconscionable, and thus unenforceable. Summarizing the opinion, the article notes that:

“The arbitration agreement consisted of two letter-size pages, consisting of seven single-spaced paragraphs in a small font size. There was no mention of an arbitration agreement during the employee’s interview or when she accepted the verbal employment offer. She received an employment offer by email, which contained links to various documents that she was to read and sign. At the time she received the offer, she did not own a personal computer or tablet and relied exclusively on her smartphone for internet access. Although the written employment offer indicated the employee would sign an arbitration agreement on the first day of her employment, she did not physically or electronically sign an arbitration agreement on the first day.“

The case should serve as a reminder for employers–and employers’ attorneys–that inclusion of an arbitration provision may be insufficient. Care also should be taken as to the manner in which the provision is presented, including font size, prominence in the document, and the circumstances in which it is communicated to the employee.