Fifth Circuit COA Holds Dallas Employer’s Arbitration Plan Was Illusory and Unenforceable
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The United States Court of Appeals for the Fifth Circuit has ruled that an arbitration agreement included in an employment contract was unenforceable because the “savings clause” failed to expressly require that advance notice regarding any amendments or termination of the arbitral agreement be provided to workers. In Nelson v. Watch House Int’l, L.L.C., No. 15-10531 (5th Cir., Mar. 2, 2016), a man, Nelson, secured a position as a training instructor with Watch House International in Dallas, Texas. Prior to beginning his employment, Nelson received an electronic copy of an employee handbook. The handbook included anarbitration agreement which stated the parties agreed to resolve any disputes through binding arbitration.
The arbitral agreement also stated:
This agreement is issued with the authority of the Company and is binding on the Company. This Agreement may not be altered except by consent of the Company and shall be immediately effective upon notice to Applicant/Employee of its terms, regardless of whether it is signed by either Agreeing Party. Any change to this Agreement will only be effective upon notice to Applicant/Employee and shall only apply prospectively.
After working for Watch House International for approximately four years, Nelson reported to his employer that he was being harassed at work over both his race and religion. About two weeks after reporting the alleged harassment, Nelson was fired.
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