Employee fired after cancer leave challenges agreement she couldn't read
California's Supreme Court reversed a ruling favoring an employer's nearly illegible arbitration agreement, holding that oppressive hiring processes trigger closer scrutiny of contract terms.
The February 2 decision in Fuentes v. Empire Nissan, Inc. should prompt HR departments across the state to examine their employment application packets and how they present arbitration agreements to new hires.
The case began when Evangelina Yanez Fuentes applied for a job at Empire Nissan. She was handed a stack of paperwork and told she had five minutes to complete it before heading to drug testing. The hiring manager mentioned the forms covered her job application, reference checks, and drug testing requirements. What nobody mentioned was the arbitration agreement buried inside.
The document's text was so blurry and broken up that it was nearly unreadable, described as “visually impenetrable” to the point that it “challenges the limits of legibility.” The arbitration clause ran about 900 words in a single paragraph, with one sentence stretching 214 words. It cited six different statutes and referenced various government agencies without explanation. Fuentes signed it and received no copy.
Two and a half years later, Fuentes went on medical leave for cancer treatment. After a year, she requested a brief extension before returning to work. Empire Nissan terminated her employment instead.
When Fuentes sued for wrongful termination, Empire Nissan moved to compel arbitration based on the signed agreement. The trial court refused, finding the agreement unconscionable. The judge noted that Fuentes never had a real chance to read or understand what she was signing. Even if she had tried during those five rushed minutes, the text was nearly impossible to decipher.
An appeals court reversed, ruling that illegibility only matters for how an agreement gets signed, not whether the terms themselves are unfair. The appellate court directed the trial court to send the case to arbitration.
The court disagreed and remanded the case for further consideration.
Writing for the six-justice majority, Justice Groban clarified an important distinction. Illegible print doesn't automatically make contract terms unfair. A term that's fair when printed in readable font doesn't become unfair just because it's shrunk to microscopic size.
However, when employers present agreements under oppressive circumstances, courts must scrutinize the actual terms much more carefully. The worse the process, the higher the bar for proving the terms are balanced and fair.
The court identified multiple problems with Empire Nissan's process. The company gave Fuentes only five minutes for the entire application packet while rushing her to drug testing. Nobody told her she was signing away her right to sue in court. Nobody offered to answer questions. Nobody gave her a copy to review later.
Even after signing, Fuentes would have needed to track down a copy, decode the barely readable print, and likely hire a lawyer to understand what she had agreed to. The court noted that's not the kind of effort most job applicants can manage, especially before a dispute arises.
The decision emphasized that employment contracts deserve careful examination because employees rarely have equal bargaining power. The pressure to accept a job offer can be particularly intense for workers who aren't in high demand.
The case now returns to the trial court, which may permit additional argument and evidence on whether the agreement is valid and enforceable.
The court also observed that illegible employment contracts appear to be a recurring problem, citing several other recent cases. The justices suggested the legislature might want to establish clear standards for employment contract readability, similar to requirements for other contract types.
For HR professionals, the implications are clear. Arbitration agreements must be printed in readable fonts. Employees need adequate time to review them and ask questions. Someone should explain what the agreements mean. Workers should receive copies of what they sign.
Rushing new hires through illegible fine print might save a few minutes during onboarding, but it could prove costly when enforcement becomes necessary. The message from California's highest court is straightforward: if you want arbitration agreements to withstand legal challenge, make them accessible and give employees a genuine opportunity to understand what they're signing.
