Arbitration agreements are very common in the Texas work force. Increasingly common is the onboarding process in which new employees sign everything online. That leads to issues. The arbitration agreement provision is very routine. Will the employer get around to signing every arbitration agreement? In Hi Tech Luxury Imports v. Morgan, No. No. 03-19-00021-CV (Tex.App. Austin 4/30/2019), the employer forgot to sign the agreement. Yet, Hi Tech sought to compel arbitration.
The district court denied the employer’s motion to compel arbitration. On appeal, the Third Circuit in Austin affirmed. The higher court noted it is basic contract law in Texas that for an agreement to be binding, it must be signed by both parties. The agreement makes several references to this being a “mutual” agreement. Both parties would be giving up their right to a jury trial by signing the agreement. if only one party signs, then only that one party has given up the right to jury trials. That means the agreement is not binding. See the decision here.
The key point for these online arbitration agreements is that if the agreement expresses a requirement that the agreement be signed, then signatures from both parties are necessary. The Fourth Court of Appeals in San Antonio discusses the mutual signature requirement in Advanced Foundation Repair v. Melendez, No. 04-19-00073 (Tex.App. San Antonio 7/31/2019). Like the case in Hi Tech, the foundation company – which created the agreement – did not sign the intended arbitration agreement. Since the agreement stated that both parties needed to sign to make the agreement binding, it was, therefore not binding.
Signing agreements online may be easier, but not if the employer forgets its part in that process.
