November 21, 2014 Leave a comment
Many business owners have been advised by their attorneys at some point in time to include an arbitration clause in their employment agreements or employee handbooks to make sure that any employment disputes are resolved by an arbitrator and not in a court of law. After all, many attorneys subscribe to the school of thought that arbitration is cheaper and faster than litigation.
Any employers that follow that advice and want to include an arbitration clause, should follow a few simple rules to make sure that the arbitration clause is actually enforceable:
1. The arbitration clause must be simple and clear. For example, in Texas Health Resources and Texas Health Presbyterian Hospital Dallas d/b/a Presbyterian Hospital Dallas v. Kruse, an employee of the hospital was able to avoid arbitration by claiming that she did not know that she was required to arbitrate her employment disputes because the employee handbook “encouraged” employees to use an alternative dispute resolution process, but did not state that it was mandatory.
2. When employment agreements are revised, make sure the arbitration clause remains in effect and covers the necessary areas. In The Subsea Company v. Raquel Payan and Seven Onshore/Offshore, LLC, an employee attempted to avoid an arbitration clause in her old employment contract because her revised employment agreement did not have such a clause. The Fourteenth Court of Appeals closely looked at the language of the old and the new agreement and determined that since the new employment contract did not address compensation and the old agreement did, the arbitration clause contained in the old agreement continued to apply to compensation disputes.
3. Include a “Halliburton Savings Clause” in an employment handbook. An employment handbook that contains an arbitration policy should state that it can be changed at any time by the employer only after notice is provided to employees. If an employer can change the rules without giving an employee advance notice, then the agreement between the employer and its employees is illusory and will not be enforced by courts. The arbitration policy should also make clear that the arbitration process or policy will not be changed once an employee has suffered an employment-related injury or initiated an adverse-employment claims.
If you are interested in having your handbook reviewed and/or revised or you are involved in an employment dispute that involves an arbitration clause and need assistance, please contact Leiza Dolghih at Leiza.Dolghih@GodwinLewis.com or (214) 939-4458.