A New Years’ Resolution for Your Handbooks: Keep Your Arbitration Agreements Out

arbitration agreement with gavel

 

From LexologyRaven Applebaum discusses a case in which an arbitration agreement contained in an employee handbook was challenged because it could be changed at any time by the employer and therefor lacked consideration.  Raven writes:

A recent case out of El Paso serves as good reminder that arbitration agreements contained in handbooks can be problematic if a company tries to compel arbitration. At the beginning of most handbooks, there is usually some variation of the statement that the policies contained in the handbook do not constitute a contract and are subject to unilateral revision by the company at any time. For the most part, this disclaimer serves as a reminder to employees that their employment is at will. If, however, the arbitration agreement is part of the handbook, then the “not a contract” language could be interpreted to apply to the arbitration agreement as well.

This is the issue that arose in Whataburger Restaurants LLC v. Cardwell, ___ S.W.3d ___, 2017 WL 3167487 (Tex. App.—El Paso 2017). Yvonne Cardwell, a Whataburger employee, sued her employer due to injuries she incurred while at work. Whataburger moved to compel arbitration. In support of its motion to compel, Whataburger introduced evidence that it had an arbitration agreement in its handbook, and that Cardwell signed an acknowledgement of receipt of the handbook. The acknowledgment sheet also included “a specific place where Cardwell acknowledged the binding nature of the arbitration policy.” Whataburger also showed that Cardwell’s regular paychecks “contained an almost identically worded statement acknowledging the arbitration policy.”

Nevertheless, “Cardwell opposed arbitration on a number of grounds including claims that the [arbitration] agreement was unconscionable and illusory.” Cardwell argued that the arbitration agreement was contained in the handbook, which stated that Whataburger could change the handbook at any time—unilaterally— effectively nullifying the arbitration agreement due to lack of consideration.

 

Read the full story at A New Years’ Resolution for Your Handbooks: Keep Your Arbitration Agreements Out

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