In Silva v. Cross Country Healthcare, Inc. (2025), a California Court of Appeal invalidated an employer’s arbitration agreement after finding that conflicting provisions in simultaneously executed contracts rendered the agreement unconscionable. The court of appeal held that when an employer requires employees to sign both an arbitration agreement with mutual terms and a separate employment agreement that overrides those terms to favor the employer, the resulting arbitration framework is unenforceable.
The employer required employees to sign an arbitration agreement obligating both parties to resolve all claims through arbitration. At the same time, it presented a separate employment agreement to employees that preserved the employer’s right to litigate certain claims in court while restricting the employee’s rights to arbitration only. Three employees challenged the arbitration provision, arguing that the second agreement effectively stripped the first of its purported mutuality.
The court of appeal considered the two documents together and concluded that they formed a single, integrated agreement. It found that the employer had undermined mutuality by carving out claims more likely to be brought by the employer, such as those related to trade secrets or restrictive covenants, while forcing the employee to arbitrate the types of claims employees are more likely to assert. That imbalance created substantive unconscionability.
The court of appeal also found the two agreements created procedural unconscionability. The employer presented both agreements simultaneously, offered no explanation of their relationship, and gave the employee no meaningful opportunity to review, negotiate, or reject the terms.
Although the employer attempted to isolate the arbitration agreement as a standalone contract, the court rejected that argument. It reaffirmed that courts will construe multiple agreements signed at the same time as a unified contract, particularly where one agreement overrides or contradicts another. The court of appeal noted that even an integration clause, which ordinarily limits interpretation to the specific terms of that contract, cannot shield an employer from scrutiny where the practical effect of multiple documents is to create an unfair arrangement.
In addition to striking the arbitration provision, the court of appeal found the employment agreement contained other unlawful terms, including overbroad confidentiality, non-compete, and non-solicitation covenants, which further contributed to the finding of unenforceability.
Silva underscores the importance of ensuring consistency and fairness across all employment documents. Courts will closely examine the substance of arbitration agreements and reject those that appear procedurally coercive or substantively one-sided. Employers who include carve-outs that favor their own interests or who present conflicting terms across documents risk losing the ability to compel arbitration and exposing themselves to litigation in court.
Silva v. Cross Country Healthcare, Inc., No. B337435.