Texas Court Holds Employment Arbitration Agreement Enforceable Despite Employer’s Failure to Sign Document
Jul 20, 2020
Austin, TX (Law Firm Newswire) July July 20, 2020 – The case illustrates the importance of understanding the terms to an employment agreement as well as the courts’ general philosophy that parties are held to their agreements, notwithstanding any technical deficiencies in a written document.
Earlier this year, a state appellate court issued a written opinion in a Texas employment dispute case based around the issue of whether the employee was bound by an arbitration agreement that she signed as a condition of employment. Specifically, the issue was whether the employee could still be bound by the agreement although the employer did not sign the agreement.
The Facts of the Case
In May 2018, a woman (“the employee”) was offered a senior production technician job with the defendant company. The written offer of employment included a letter explaining, “as a condition for you to commence your employment with the Company, you are required to sign the Company’s separate Confidentiality and Arbitration Agreement a copy of which is being provided to you along with this offer letter.”
The employee signed an arbitration agreement, indicating that it was an at-will employment position, and that by signing the document she agreed “that any and all disputes, claims or controversies arising out of or relating to this Agreement, the employment relationship between the parties, or the termination of the employment relationship, that are not resolved by their mutual agreement shall be resolved by final and binding arbitration by a neutral arbitrator.” The employee signed the agreement; however, the employer did not.
In October of that same year, the employer terminated the employee. A few months later, the employee filed a Texas wrongful termination lawsuit against the employer, claiming that, prior to her termination, she was subject to “harassing and abusive behavior.”
The employer denied the employee’s claims, and also moved to have the case dismissed so that it could proceed through the arbitration process. In response, the employee claimed that the arbitration agreement was not valid because the employer did not sign it. The trial court agreed with the employee. The defendant then appealed the case to the Court of Appeals for the First District of Texas.
On appeal, the court reversed the lower court’s decision, finding in favor of the employer. The court first noted that, a party seeking to compel arbitration must show, 1.) that there is a valid arbitration agreement, and 2.) the claim falls within the scope of the agreement. Here, the court noted, the issue was whether there was a valid arbitration agreement.
The court went on to analyze the arbitration agreement that the employee signed, explaining that a Texas contract must have the following elements:
1. An offer
2. An acceptance
3. A meeting of the minds
4. Each parties’ consent to the terms
5. Execution and delivery of the contract with the intent that it be mutual and binding
The court focused its analysis on the fifth prong, because the question is whether the employer intended to be bound by the agreement notwithstanding the fact that a representative of the employer did not sign the agreement.
The court began its analysis by noting that Texas courts do not require a party to sign an arbitration agreement for the agreement to be valid. However, if an agreement expressly states that a signature is required, then an agreement without a signature will not be valid. Here, however, there was no such language in the arbitration agreement. Thus, the question was whether a blank signature line alone is enough to show an employer’s intent not to be bound by the agreement.
The court held that, absent additional information indicating that the employer did not intend to be bound by the agreement, the agreement was valid. In ruling in favor of the defendant employer, the court noted that there was nothing in the agreement indicating the employer’s signature was a condition precedent of an enforceable agreement. The court acknowledged that, in the absence of a signature, the court can look to evidence outside the contract to determine a party’s intentions. However, there was no other evidence presented indicating that the employer did not intend to be bound by the arbitration agreement. In fact, the language in the agreement, which, of course, the employer drafted, seemed to indicate that the employer was in favor of the agreement.
Austin employment attorney Gregory D. Jordan reminds employers and employees that it is critical to “cross all the T’s and dot all the I’s” when it comes to employment contracts. Even though the employer in this case ultimately was able to get the case dismissed in favor of arbitration, it cost them a significant amount of time and money to do so.
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/
Law Offices of Gregory D. Jordan
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