Employment arbitration agreements are often utilized by employers to minimize costs, risk, and publicity associated with civil litigation.  Whether such an agreement is enforceable is often litigated: if the agreement is both procedurally and substantively unconscionable, a court may void the agreement.  

Substantive unconscionability involves the terms of the agreement itself, whereas procedural unconscionability involves the way the terms are presented.  For example, uneven bargaining power, contracts of adhesion, and agreements with hidden terms or excessive legalese, may all be deemed to have elements of procedural unconscionability. 

In Velarde v. Monroe Operations, LLC, a Court of Appeal added two new items to the list of factors that may be deemed procedurally unconscionable: (1) inadequate time to review the agreement and (2) misrepresenting (even if unintentional) its terms.  There, the employer required the employee review and sign the arbitration agreement quickly and before she could start work.  When the employee stated she was confused, the HR member erroneously told her “this will help us resolve any legal issues without having to pay lawyers.”  The court held that both issues caused there to be “so much procedural unconscionability.”

Fortunately, both are relatively easy for employers to avoid.  First, employers can provide their HR personnel with a basic understanding of the arbitration agreement and train them to refrain from making any representations about the agreement.  Second, employers can give employees more time to review and sign the agreement.  For example, the agreement can be provided to the employee before their first day of work. 

By taking these simple precautions, employers can reduce the risk that their arbitration agreements will be found unenforceable due to procedural unconscionability.