Independent Contractor Misclassification and Compliance News March 2025

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we bring you the latest news stories from around the web.

Keys to Making Your Online Arbitration Agreement Enforceable

Having an arbitration agreement is a key element for companies who engage with independent contractors. An arbitration agreement is the best way to avoid class action lawsuits. Many companies have online arbitration agreements that are included in their Terms and Conditions for using the website. Because online arbitration agreements prevent plaintiffs from starting a class action lawsuit, they are frequently subject to attack. Typically, the attacks challenge whether there was a valid agreement under traditional contract law theories: the person did not have actual or constructive notice of the terms or the person did not take some action to agree to the terms.

In a recent case, the Ninth Circuit Court of Appeals reviewed a challenge to the validity of an online arbitration agreement and said that the terms of any online agreement must be readily apparent to the person and the person must unambiguously agree to terms. Unfortunately, in the case reviewed by the Ninth Circuit, the online agreement did not meet these standards. Two key points in this case are as follows.

Readily Apparent: Quoting a previous case, the court said that “while it is permissible to disclose terms and conditions through a hyperlink, the fact that a hyperlink is present must be readily apparent.” The question of whether a link is “readily apparent” depends on the conspicuousness and placement of the hyperlink which, in turn, depends on the size and color of the font especially compared to other text on the page and the placement of the hyperlink.

Unambiguous Manifestation of Assent to Terms: In addition to being readily apparent, a website user must agree to the terms by taking action that unambiguously demonstrates that they agree to the terms. By simply clicking “Continue”, it is not clear that the user agreed to the terms.

This case highlights the challenges to online agreements. If you have an online agreement, these are some of the options:

1. Scrollwrap Agreements. A scrollwrap agreement may provide the most protection to a company because it requires a person to scroll through an entire agreement to click to agree at the end of the agreement. A scrollwrap agreement provides the person with the terms and requires the person to demonstrate consent. A scrollwrap agreement may protect a company, but may not be the best user experience and a company may lose customers if they must scroll through a long set of terms.
2. Clickwrap Agreements. A clickwrap agreement requires a person to demonstrate that they agree to a website’s terms by checking an “I agree” box or similar button after being presented with a hyperlink to the terms. A clickwrap agreement may balance user experience with the need to demonstrate an agreement was made. Clickwrap agreements are routinely enforced by courts.

Companies should consult with their attorneys and review their online agreement to make sure that they are clear, conspicuous and that a person clearly demonstrates consent to the agreement.

For more information, check out our resources page on misclassification and compliance. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.