When an employee is hired, in many, if not most instances, he or she is required to sign some form of employment agreement. These contracts outline the duties and expectations of both the employer and the employee. Frequently, Texas employment contracts include an arbitration clause, which is an agreement between the parties that any dispute arising from the employment relationship will be resolved out of the court system by an independent arbitrator.
For the most part, Texas employment arbitration agreements favor the more sophisticated party. For one, the costs of defending a case in arbitration is lower than a traditional Texas employment case in the court system. Additionally, depending on the terms of the arbitration agreement, certain rules of evidence may not apply. Moreover, an arbitrator’s conclusion is generally final and thus not appealable.
Like other contractual agreements, arbitration agreements can be enforceable if they are voluntarily entered into by both parties, are not overly broad in their scope, and do not provide an unfair benefit to one party. Thus, just because an employee signed an employment contract that contains an arbitration clause does not necessarily mean that the clause will be enforceable. At the same time, an arbitration agreement can be enforced even if the employee does not sign the agreement, particularly if they continue to work knowing that there is an arbitration policy.