Copyright: ghoststone / 123RF Stock Photo
Copyright: ghoststone / 123RF Stock Photo

In most issues, my San Francisco colleague, Jeff Polsky, and I are kindred spirits.  After all, his wife is a Nancy, and my guy is a Jeff.  Plus, we both have exceptional senses of humor (oh wait, maybe that’s just him).

In any event, there is one issue where we apparently have a professional difference of opinion.  In his blog post of yesterday, Jeff discusses the recent litigation involving Uber and its attempts to enforce arbitration agreements with class action waivers.  Jeff explains that unconscionability in California has two elements: procedural (the you have to sign this or you can’t work here approach) and substantive (terms that give an unfair advantage to the employer).  An opt out provision moots the “take-it-or-leave-it” aspect of these agreements.  In that context he posits the question:  Should employers allow their employees to opt out of their arbitration agreements?

Jeff concludes that he rarely puts opt out provisions in arbitration agreements for many legitimate reasons, including the fact that the employees most likely to sue will generally opt out.  If the goal is to avoid lawsuits, that goal is easily thwarted.

As a counterpoint, I almost always recommend clients strongly consider including an opt out in their arbitration agreements for three reasons.

First, very few employees actually opt out.  I don’t know why, but they just don’t.

Second, when you are trying to enforce the arbitration agreement in court (and as Jeff notes most courts are hostile to arbitration agreements), you want every advantage you can get, and I don’t want to concede procedural unconscionability.  Especially when substantive unconscionability is a constant moving target, and an otherwise valid arbitration agreement can be held unenforceable if the latest version of the JAMS rules aren’t attached, or it limits discovery too much, or some other relatively minor problem (or problems) render it substantively unconscionable.

Third, if a handful of employees do opt out, then it is a terrific argument to make that the agreement really was optional, especially if those employees weren’t immediately fired.  And by the way, firing employees who opt out is not recommended.

I love a healthy debate, especially with any Jeff.  So I say, in most circumstances it makes sense to include an opt out in your arbitration agreement.