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Texas High Court rules arbitration agreements valid despite changing employment conditions

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in Discrimination and Harassment,Employment Law,Firing,HR Management,Human Resources,Leaders & Managers,Management Training

The Texas Supreme Court has ruled that an arbitration agreement presented as a condition of employment is valid even though it was initially drafted by an HR management company that no longer manages personnel matters.

The court looked carefully at the arbitration agreement and concluded it was a binding contract—partly because it contained a clause that allowed the employer to end the agreement prospectively only.

Recent case: Angelica Soltero worked for Global Enterprises, a plastics manufacturer, for four years before the company outsourced its HR functions to a staff-leasing company. That company told employees they had to agree to arbitrate any employment disputes as a condition of continued employment.

The agreement presented to employees included a clause that allowed the employer to change the terms at any time, but only going forward from the time of the change.

After Global terminated its outsourced contract, Soltero tried to sue for wrongful termination based on national origin and retaliation for reporting sexual harassment.

Global pulled out the arbitration agreement and asked the court to order arbitration of Soltero’s claims. Soltero argued the arbitration agreement wasn’t a valid contract because the employer could change the terms at any time.

The court ordered arbitration. It said that the fact the employer could change the terms only going forward meant there was a valid contract. (In re Polymerica, No. 08-1064, Supreme Court of Texas, 2009)

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