The arbitration process stipulated in the employment agreement is unconscionable: court
The BC Supreme Court has rejected an employer’s bid to stay a lawsuit filed by its employee seeking unpaid bonuses and commissions, ruling that the dispute should be resolved in court rather than arbitration.
David Wiederhold is a senior sales account executive at Aspentech Canada Corporation (ACC). He filed a lawsuit to recover $103,067.60 in unpaid bonuses and commissions. He claimed the amount was owed to him under an incentive plan offered by the company. ACC and its parent company, Aspen Technology, Inc. (ATI), however, sought to have the case moved to arbitration, as stipulated in an agreement that required disputes to be arbitrated in Boston, Massachusetts.
The defendants applied for a stay of the court proceedings under the BC Arbitration Act, arguing that the dispute should be resolved by a panel of arbitrators, as per their employment agreement. Wiederhold opposed this application, claiming the arbitration clause was unenforceable for several reasons, including the lack of fresh consideration, public policy concerns, and the disproportionate cost of arbitration relative to his claim.
In its decision, the court ruled in Wiederhold’s favour, rejecting the defendant’s request to move the case to arbitration. The court found that the arbitration clause, imposed after Wiederhold had already started working for ACC, was not supported by fresh consideration, rendering it unenforceable. The court also determined that the clause violated public policy, as it would deprive Wiederhold of the protections afforded by the BC Employment Standards Act, which guarantees the right to wages, including commissions.
Further, the Supreme Court found the arbitration process stipulated in the agreement unconscionable, particularly given the costs involved. Wiederhold estimated the cost of arbitration to range between $35,000 and $76,000, significantly disproportionate to his claim. The court concluded that these costs could prevent him from effectively pursuing his claim, thus making the arbitration clause unenforceable.
Ultimately, the court refused the defendant's application for a stay, allowing Wiederhold to proceed with his claim in court.
