California Court Finds Arbitration Clause In An Employment Agreement Unconscionable.

The Court of Appeal (First District) recently determined that where there is plainly a power imbalance between the parties, and a worker is required to sign an agreement containing a mandatory arbitration provision, and there is a dispute over whether the worker was/is an employee or an independent contractor, it is both unnecessary and inappropriate to resolve the question of whether the worker was an employee for purposes of an unconscionability determination. The Court of Appeal ruled that an arbitration clause is procedurally unconscionable where it was imposed on a worker as a condition of employment, with no opportunity to negotiate, when the worker was not fluent in English, and the agreement did not clearly state what rules would govern arbitration. The Court of Appeal further ruled that an agreement is substantively unconscionable where it required a worker to bear his own costs for arbitration, barred him recovering attorney fees or costs, barred him from seeking statutory remedies, barred him from bringing a Private Attorney General Act claim, and barred him from seeing a Berman hearing. (See, Subcontracting Concepts (CT), LLC v. Chafie Gabriel Pereira Moreira De Melo (Department of Industrial Relations) - filed April 10, 2019, First District, Div. Two - 2019 S.O.S. 1763.)


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