March 6, 2023 — Press Release

Worker and consumer rights advocates from California and across the country call on the California attorney regulation agency to act quickly to clarify that it is unethical for attorneys to encourage corporate clients to include illegal or unenforceable terms in fine-print contracts.

On Friday, a coalition of worker and consumer advocates urged the California attorney regulation agency—the Committee on Professional Responsibility and Conduct (COPRAC)—to adopt an opinion clarifying that it is unethical for attorneys to encourage their corporate clients to include illegal or unenforceable terms in fine-print contracts. The coalition includes the California Employment Lawyers Association, Economic Security Project Action, National Consumer Law Center, National Employment Law Project, Open Markets Institute, People’s Parity Project, Public Good Law Center, Public Justice, Student Borrower Protection Center, and Towards Justice.

At Friday’s COPRAC meeting, the opinion, which had been scheduled to be discussed, was once again removed from the agenda. For over two years, COPRAC has failed to formalize the proposed opinion, allowing lawyers and their corporate clients to continue to include unenforceable terms in the fine print of worker and consumer contracts. The Committee’s inaction on this critical opinion means that people in California will continue to be deceived as to their rights in the workplace and beyond.

Policymakers across the country are taking important steps to protect workers and consumers from coercive contracts. The Federal Trade Commission, for example, recently issued a proposed rule that would prohibit non-compete agreements affecting workers; this rule would provide workers around the country with the same protection against non-competes that California workers have had for many years. Other jurisdictions from Washington, D.C. to Oklahoma have also taken steps to limit the use of non-compete clauses for workers within their borders. These steps are critical: banning non-competes increases workers’ earnings, saves consumers on health care costs, and promotes the creation of new businesses.

But attorneys frequently defy the law and draft fine print contracts that include illegal and unenforceable terms. Research shows that workers are subjected to non-compete clauses at approximately the same frequency in states where those non-competes are unenforceable as in states where they remain legal. Because workers and consumers assume their contracts are legal, those terms harm workers and consumers by chilling them from exercising their rights. Illegal non-compete agreements, for example, can keep workers trapped in their jobs even if no court would ever enforce them.

If California adopts the proposed opinion, it would be the first state to clarify that an attorney engages in unethical conduct by knowingly advising a client to enter into an illegal contract term. And because the opinion also clarifies that non-compete agreements are illegal in California, it would be unethical for a lawyer in the state to advise a client in the state to enter into a non-compete with its workers. 

The coalition also urged COPRAC to go further than its current draft opinion. In particular, it argued that COPRAC should remove the distinction between illegal contract terms and terms that are merely “unenforceable.” When a lawyer urges a client to enter into a contract term with a worker or consumer that the lawyer knows to be unenforceable in court, they are encouraging their client to deceive the worker or consumer about their rights. That’s unethical whether or not the term at issue is also “illegal.” 

“California has been considering the opinion at hand for years. In the meantime, untold numbers of workers and consumers in the state have been forced to sign freedom-restricting contracts, not knowing that the contract provisions would never be enforced by a court,” said Molly Coleman of People’s Parity Project. “While we remain grateful for COPRAC’s diligent attention to this important matter, workers can’t wait any longer. Improving and finalizing the opinion must be a top priority for the Committee.” 

“California should clarify what has long been obvious,” said David Seligman, Executive Director of Towards Justice. “Behind every unenforceable contract between a corporation and a worker or consumer is a lawyer who wrote it. Unenforceable fine print can cause real harm. It can keep people trapped in their jobs or chill them from vindicating their rights. As members of the legal profession, we have a duty to uphold the law, not undermine it, and there must be consequences for doing otherwise.” 

“From unfair forced arbitration, to non-competes, to non-disclosure agreements prohibiting workers from discussing discrimination, lawyers use contract terms that they know will never be enforced,” said Public Justice Staff Attorney Shelby Leighton. “While we applaud COPRAC’s efforts to curb lawyers’ unethical actions, we join our allies in urging the Committee to remove any distinction between illegal and unenforceable contract provisions so that workers can still exercise their rights in court. We’ve seen how employers use both illegal and unenforceable contract terms to silence workers and keep them in the dark about their rights. California should remove that distinction and act quickly to finalize the Formal Opinion.”

“As the Consumer Financial Protection Bureau has clarified, presenting a consumer with an unenforceable term in the fine print is deceptive,” said Stuart Rossman, Director of Litigation at the National Consumer Law Center. “When lawyers encourage their clients to include unenforceable terms in their standard form contracts, they violate core ethical norms that prevent lawyers from making misrepresentations to others about their rights. We appreciate COPRAC’s attention to this issue, and are delighted to come together with consumer and worker advocates to support this important effort.”

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