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Arbitration agreement applies after discharge

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Here’s very good news for Texas employers that want to make sure employment disputes stay out of the court system and go to arbitration instead: A federal court has ruled that an arbitration agreement that purported to apply to just about all possible employment-related claims now and in the future can also apply to subsequent failure-to-hire claims.

Recent case: Michael, who was older than 40, worked for Sears.Sometime during his employment, he had been asked to sign an arbitration agreement that said:

“[V]irtually any dispute related to Associate’s employment must be resolved only through binding arbitration. Arbitration replaces the right of both parties to go to court, including the right to have a jury decide the parties’ claims. Also, this Agreement prohibits Associate and Company from filing, opting into, becoming a class member in, or recovering through a class action, collective action, representative action or similar proceeding.”

In addition, the arbitration agreement clearly stated, “This Agreement will continue to apply after Associate is no longer employed by Company.”

Michael claimed his supervisor told him his job was being eliminated. He suspected age discrimination and sued. The case was sent to arbitration.

While his case was still pending, Michael saw a Sears job posting for what he believed was his old job. He tried to apply, but someone else got the job. Michael applied for three more jobs and wasn’t hired for those either.

Michael sued in federal court, alleging that he hadn’t been hired because of age discrimination.

Sears asked the court to send the case to arbitration, arguing that the original arbitration agreement applied to past, present and future employment with it—including claims that a worker wasn’t rehired. The court agreed and sent Michael’s second case to arbitration. (Duge v. Sears, No. 6:16-CV-114, WD TX, 2016)

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