Oregon: Savings Clauses Increase Enforceability of Arbitration Agreements

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All Employers with OR Employees

EFFECTIVE

July 8, 2022

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In Gist v. ZoAn Management, Inc., the Oregon Supreme Court stated that an arbitration agreement was enforceable due to a savings clause which allowed arbitrators to disregard invalid or unenforceable provisions of the original agreement. In this case, an employee entered into a Driver Services Agreement (DSA) where he and other drivers were considered independent contractors as they provided the defendant with delivery services. The employee filed a class action lawsuit against the employer claiming that he and other drivers were actually employees and the employer had violated Oregon’s wage and hour statutes.

The Court ultimately concluded the savings clause in the DSA allowed the arbitrators to disregard invalid or unenforceable provisions, including statements that the drivers were independent contractors. Because of the savings clause, the arbitration provision did not violate ORS § 652.360 which prohibits employers from using a contract to exempt themselves from the requirement to pay wages. Employers are encouraged to include a savings clause in their arbitration agreements to increase enforceability of the entire agreement.

Action Items

Have arbitration agreements reviewed by legal counsel for updates.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2022 ManagEase