Written by Zachary Cavanagh, Of Counsel | Koegle Law Group
What Happens When Your Employment Contracts Conflict?
Imagine this: you’ve invested in a well-drafted arbitration agreement to shield your business from costly lawsuits and unpredictable jury verdicts. But then, in the middle of a legal dispute, you discover that your arbitration agreement is worthless — invalidated because of a separate confidentiality agreement.
This isn’t hypothetical. It’s exactly what happened in a recent California appellate decision, Gurganus v. IGS Solutions LLC (2025).
The case is a wake-up call for California employers. Here’s what you need to know to avoid that outcome.
Why This Matters Right Now in California
Arbitration remains one of the most effective tools to manage legal risk in the workplace. It keeps employment disputes out of public courtrooms, reduces the risk of runaway jury verdicts, and often curbs attorneys’ fees.
But California courts are scrutinizing arbitration agreements more than ever — especially when paired with restrictive policies that limit employee rights.
The Gurganus ruling shows that a confidentiality agreement can invalidate an arbitration agreement if the two are signed together and the combined effect is unfair to employees. That means employers must ensure that all related documents — not just the arbitration clause — pass legal muster.
1. Understand That Concurrent Agreements Are Legally Linked
The Risk: If your arbitration agreement and other employment contracts (like NDAs or dispute resolution policies) are signed at the same time, courts will likely interpret them together. See Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 490–491.
What to Do Instead:
- Treat the onboarding package holistically — every document counts.
- Review how your arbitration agreement aligns (or conflicts) with NDAs and confidentiality clauses.
- Avoid presenting conflicting dispute resolution paths (e.g., one agreement says “arbitration only” while another allows court litigation).
Why It Matters: In Gurganus, the court invalidated the arbitration agreement partly because it was signed alongside a confidentiality agreement that gave the employer court access but forced the employee into arbitration — a lack of mutuality the court deemed “substantively unconscionable.” That’s the kiss of death for any arbitration agreement.
(For more on the importance of injunctive relief mutuality, see our post: “Protecting Your Business with Arbitration Agreements — Choosing the Right Approach to Injunctive Relief”)
2. Scrutinize Confidentiality Clauses That Restrict Informal Investigation
The Risk: Confidentiality language that prevents employees from talking to witnesses or sharing information about their claims outside formal discovery can be deemed “substantively unconscionable.”
What to Do Instead:
- Use confidentiality clauses that are narrowly tailored and don’t restrict employee rights to investigate potential legal claims.
Why It Matters: In Gurganus, the court ruled that a confidentiality provision prevented the employee from contacting witnesses outside the formal discovery process.
The practical effect? The employer could freely prepare its defense by interviewing employees without restriction, while the employee was blocked from doing the same. That imbalance contributed directly to the court’s decision to invalidate the entire arbitration agreement — not just sever the offending provisions.
3. Don’t Count on Severability to Save a Flawed Agreement
The Risk: Courts won’t always fix your agreement by striking out bad clauses. If there are multiple unfair terms, they may throw out the entire arbitration agreement.
How Koegle Law Group Helps
At Koegle Law Group, we regularly advise California employers on how to design legally enforceable arbitration and confidentiality agreements that work together, not at cross-purposes. We help you align your employment documents — all of them — to preserve the protections of arbitration while avoiding pitfalls that courts now watch for closely.
Don’t Let One Clause Undermine Your Entire Risk Strategy
A poorly drafted confidentiality agreement can unravel the benefits of arbitration and land your business in expensive, high-stakes litigation.
If your employment agreements haven’t been reviewed recently — or if you use multiple agreements from different sources — it’s time for a legal tune-up.
Contact Koegle Law Group today to schedule a confidential consultation. Let’s make sure your contracts are protecting your business — not putting it at risk.stakes, and focus on building a strong team.
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