Paying workers more doesn’t make arbitration waivers unfair, Arizona court rules

Both had signed a one-page “Volunteer Agreement and Waiver” during orientation. The document set out its arbitration clause in bold, underlined text and warned, in capital letters directly above the signature line, that signing meant giving up the right to sue. A Hickman representative never explained how arbitration worked. 

A Maricopa County judge sided with the workers and refused to send the cases to arbitration. The judge found a “radical power imbalance” because Hickman paid $4.85 an hour against roughly $.10 an hour for other prison jobs. That gap, the judge said, left inmates so “highly incentivized” to sign that Hickman could “essentially write anything that they want into” the contract. 

The appeals court reached the opposite conclusion. “To penalize Hickman because it paid inmates the highest wage turns procedural unconscionability on its head,” it wrote. Rewarding that argument, the court added, would give employers “every reason to pay inmates less.” 

The court said the clause was not buried. It sat on a separate page, in conspicuous type. Both signers had time to read it and were free to ask questions. Neither did. Arizona law, the court noted, assumes a person “read and understood the terms” of a contract they sign. 

The court also held that employers do not have to explain standardized clauses, that take-it-or-leave-it contracts are routinely enforced, and that unequal bargaining power alone does not void an arbitration agreement.