A Lost Employment Agreement Costs an Employer a Lot of Money

document-loser1In United Rentals, Inc., et al. v. Smith, the company tried to force the employee to arbitrate their wrongful termination dispute pursuant to an arbitration clause contained in the employment agreement that Mr. Smith had allegedly signed when he was hired by the United Rental.  The catch was that the company could not find the original agreement and all the copies on file were illegible.

So, in support of its motion to compel arbitration, the employer submitted a “digitally enhanced” copy of an employment agreement and a statement by its former human resources director, who swore that Mr. Smith signed an employment agreement when he was hired, but did not identify the “digitally enhanced” copy as being that agreement or its “true and correct” copy. The employee’s counsel argued that the copy produced by the employer was not authentic and, therefore, there was no proof that Mr. Smith ever agreed to arbitrate its disputes with the United Rentals.  Both the trial court and the Eighth Court of Appeals agreed.

Thus, instead of going through an arbitration, the employer in this case ended up having to defend itself in court, spend thousands of dollars on an appeal of the trial court’s order, and spend even more time and money to continue to defend in state court after losing the appeal.

Moral of the Story? While record keeping is not a fun part of running a business, it is a key component of a successful enterprise.  Employers should always keep a good and legible copy of all employment (and independent contractor) agreements on file.

Leiza Dolghih frequently advises Texas business owners regarding a variety of employment and business issues with the goal of reducing their risk of litigation from employees and the companies with whom they do business.  For more information, contact  Leiza Dolghih at Leiza.Dolghih@GodwinLewis.com.

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