Texas Supreme Court to Consider Validity of Arbitration Agreement in Employee Handbooks
Don Cruse at the Supreme Court of Texas Blog, wrote about the first case of the new term on which the Supreme Court of Texas requested full briefing --Hatton v. D.R. Horton, Inc. that case involves an issue of significant importance to Texas employers. According to Don, this case
concerns the enforceability of arbitration clauses in employee handbooks. In this case, the employer is alleged to have disclaimed any attempt to bind itself by the handbook, and stated that it reserved the right to change those terms unilaterally and without prior notice.
This is an issue that frequently comes up in Texas. Employers occasionally include provisions in employee handbooks that purport to constitute binding agreements the employer may want to enforce. Frequent examples include noncompetition and arbitration agreements. The problem arises when the handbook also contains an express disclaimer provision stating that nothing the handbook constitutes a contract or other agreement and the employer reserves the right to amend the policies at any time. Where the noncompetition or arbitration provisions of the handbook are not exempted from the disclaimer provisions, a party wanting to avoid the effect of those provisions, argues that no binding contract was created because the employer reserved the right to alter or amend the policy at any time. Several Texas courts have refused to enforce arbitration agreements contained in employee handbooks because of the existence of broad disclaimer language. The fact that the Court has requested full briefing does not mean that the Court will accept the case.
In the meantime, employers and their counsel, should review their employee handbooks to ensure that broad disclaimers do not undermine important contractual agreements contained elsewhere in the employee handbooks that the employer intends to create and enforce. You can follow the status of Hatton v. D.R. Horton, Inc. here.
