Unfair Employment Agreements

Gentry v. The Superior Court of Los Angeles County (2006 WL 137228 (Cal. Ct. App. 2006) dealt with the issue of whether the plaintiff's employment contract with Circuit City had an unfair arbitration agreement.

FACTS:

The employment packet that plaintiff Gentry was given included information about arbitration. It pointed out the disadvantages and advantages of arbitration. It clearly stated that if the employee chose arbitration, the employee would then waive any potential civil claims against Circuit City. The agreement to arbitrate also contained a waiver to any potential class actions.
The employment packet included a form that gave Gentry 30 days to opt out of the arbitration agreement. Gentry did not opt out.
Gentry filed a class action lawsuit against Circuit City for damages regarding overtime. Circuit City sought a petition to compel arbitration, arguing that Gentry had waived his claim to a class action suit.

Law regarding Unfair Employment Agreements

The law recognizes what is termed as a "contract of adhesion". A contract of adhesion exists when the drafting party (in this case, the employer) has such a high bargaining power over the employee that the employee is forced to either submit to the terms of the contract or reject it.

In the following cases, the courts held that the plaintiff's agreements were unfair (or "unconscionable"):

The plaintiff in Ingle v. Circuit City (like the plaintiff in this case) was given the option of submitting to an arbitration agreement that included a class action waiver. Unlike Gentry, he had only three days to decide whether to opt out of the arbitration agreement.
In Szetela v. Discover Bank, plaintiff had a credit card account with Discover Bank. An amendment to the plaintiff's contract (which included an arbitration agreement to the contract) was mailed to the plaintiff cardholder in a "bill stuffer" that the average cardholder was unlikely to read. The plaintiff thus had no opportunity to opt out of the amendment, unless he closed his account.

Conclusion

The Court decided that because Gentry had 30 days to opt out of his arbitration agreement and was provided enough information about arbitration by Circuit City, the arbitration agreement kicked in as a result of his not opting out and the class action waiver was effective. Although Gentry claimed that the agreement "sucker[ed] unsophisticated employees into not opting out", the Court felt that Gentry had enough information and enough time to opt out. Circuit CIty was reimbursed with the costs of the lawsuit.

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The Employment Law Office of Frank Pray handles cases related to most areas of employment law. My law firm is dedicated to helping employees dealing with issues of workplace discrimination (including gender discrimination, race discrimination, age discrimination and discrimination based on religion, national origin, sexual orientation, disability, pregnancy or illness); harassment due to hostile work environment (whether sexual, verbal, or other); contract disputes; wage and hour violations (such as overtime or break violations); whistleblower retaliation, qui tam and false claims act cases; and severance agreements and negotiations. My legal services and advice are available to any employee involved in illegal or wrongful termination, assault, battery, defamation, slander, or violation of privacy; or with job concerns regarding medical leave, Occupational Safety & Health Act (OSHA), affirmative action, gay & lesbian rights, Fair Employment and Housing Act (FEHA), labor code violations, Americans with Disabilities Act (ADA), California Family Rights Act, the federal Family Medical Leave Act, Employee Retirement Income Security Act (ERISA), Worker Adjustment and Retraining Notification (WARN) Act, or the Federal Employer's Liability Act. I can be contacted by anyone seeking an attorney for information about employee civil rights, or opportunities for monetary settlement, damages, or personal injury claims. "Employee Rights" is my exclusive focus, and has been for over 15 years.

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