Arbitration Clauses in Texas Employment Contracts

Austin, TX (Law Firm Newswire) January 31, 2020 – Texas appellate court discusses when employment arbitration contracts are valid.

Recently, a state appellate court issued a written opinion in a Texas employment case discussing the enforceability of an arbitration agreement. An arbitration contract is a contractual provision by which the parties agree to forego their right to file certain lawsuits in court against the other party to the agreement. Instead, the parties agree that all disputes included in the agreement will be resolved through arbitration. The rules of arbitration are generally less formal, and arbitration can be a quicker and less expensive way to resolve a dispute. However, the results of an arbitration decision are formal and, absent certain circumstances, are generally not appealable. Thus, an employee’s decision to agree to arbitration and waive access to the court system is an important one.

In this case, a Spanish-speaking employee was working as a home health care aide when she was injured while moving a patient from a bed to a wheelchair. The company she worked for was a non-subscriber to the state’s workers’ compensation program; however, the employer was self-insured, and the company presented evidence that the employee received nearly $5,000 in compensation for her injuries. The employee filed a negligence claim against her employer.

In its defense, the woman’s employer presented a signed agreement that was entirely in Spanish, stating that, “if you continue to work for us after the effective date, you and we will have mutually agreed to arbitrate all covered claims between us.” The claims covered in the agreement included “claims arising from any injury suffered by an Employee while in the Course and Scope of Employment with Company, including but not limited to claims for negligence, gross negligence and all claims for personal injuries.” The employer asked the court to compel the woman to resolve the case through arbitration.

The employee opposed arbitration on several grounds, explaining that she had limited command of the English language, she does not remember signing the document, and she was under the impression that the documents her employer asked her to sign (including this agreement) were mere formalities. She further explained that she thought she had to sign them as a condition of her employment. The trial court denied the company’s motion to compel arbitration, and the company appealed.

The court began its analysis by noting that arbitration agreements are governed by contract law and that both sides must voluntarily agree to arbitrate. To compel another party to arbitrate their claim, the court held, the party seeking arbitration must prove 1.) there is a valid arbitration agreement, and 2.) that the claim is within the agreement. If the party seeking arbitration can do so, the burden shifts to the other party to raise a defense.

Here, the court held that the company met its initial burden to prove that an agreement existed to arbitrate the claim. The court explained that the employee never explicitly denied signing the agreement and that the company presented a signed copy of the agreement. Additionally, there was no evidence that the employee did not accept the terms of the agreement. Thus, the court found that the agreement was valid. The court also found that the woman’s specific claim fell within the agreement because it was a claim for “personal injuries.”

The next part of the court’s analysis focused on whether the woman raised a viable defense to the arbitration agreement. The court concluded that she did not. First, the court rejected the woman’s argument that the agreement needed to be signed by both her and her attorney. Under certain Texas laws, an arbitration agreement covering personal injury claims must have the signature of both parties and their respective attorneys, however, agreements that are governed by the Federal Arbitration Act (FAA) are subject to different requirements. Namely, that there is no need for an attorney signature. Finding that the FAA applied, the court rejected the woman’s’ argument that the agreement was valid for lack of an attorney’s signature.

Next, the court rejected the woman’s claim that the agreement was unconscionable. Unconscionability is a defense claiming that the contract, or how the contract was formed, is somehow unfair. Here, the woman claimed that she had limited command of the English language; however, as the court noted, the agreement was in Spanish. The woman also claimed that she was not told of the importance of the documents when she signed them. However, the court explained that a party is not necessarily excused from the terms of a contract because they are unaware of the contract’s contents or import. Thus, the court found that the arbitration agreement was valid, reversing the lower court’s decision.

Austin employment lawyer, Gregory D. Jordan reminds both employees and employers of the importance of fully understanding an arbitration agreement before entering into it. For employers, it is crucial to have a well-written and consistently enforced policy for processing new hires and educating them on the company’s arbitration policy. Employees should be sure to fully understand the rights they give up before entering into an arbitration agreement.

At the Law Offices of Gregory D. Jordan, Attorney Jordan represents both employers and employees in all types of Texas employment lawsuits and arbitration matters. Attorney Jordan has over 30 years of relevant experience assisting businesses and employees in Travis County and throughout Central Texas. Contact the Law Offices of Gregory D. Jordan at http://www.theaustintriallawyer.com/.