The Texas Supreme Court recently ruled that an arbitration agreement between an employer and a former employee should be enforced. In re 24R, Inc., No. 09-1025 (Tex. Oct. 22, 2010), available at http://www.supreme.courts.state.tx.us/historical/2010/oct/091025.htm. The former employee filed an employment discrimination lawsuit, and the employer moved to compel arbitration based on a signed arbitration agreement. The trial court denied the request, and the employer sought mandamus relief.
The former employee argued that the arbitration agreement was unenforceable because it lacked consideration and that it was illusory because the employer retained the right to amend or terminate the agreement. The Court disagreed. First, mutual agreement to arbitrate provides sufficient consideration. Here, the agreement did not lack consideration because both parties agreed to arbitrate any claim. Second, an arbitration agreement is not illusory unless one party can avoid its promise to arbitrate by amending or terminating the agreement. The former employee argued that the employer’s employee manual gave it the right to modify or abolish any employment policy. The Court rejected this argument, however, because the arbitration agreement itself neither stated that the employer could change its terms nor incorporated by reference the employee manual. The Court thus conditionally granted mandamus relief to the employer.
To speak to a Dallas, Texas employment law attorney about pursuing or defending an employment-related matter in court or in an arbitration tribunal, contact the employment law attorneys at Clouse Dunn Khoshbin LLP at [email protected].
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