Keeping Your Job Just Got a Little Bit Harder

The right to a trial by a jury of one's peers.  The right of all freeborn Americans and inviolable.  Well, not so much.  Look at your cell phone contract or your credit card contract. Mandatory arbitration clauses abound - which means that when either breaches its contract with you, there is no jury for you, no trial, no civil proceedings.  

So too with employment contracts in Texas.  
This week, the Texas Supreme Court handed down a decision upholding an employee's waiver of his right to a jury trial in case of any disputes with his employer.  The case, In re Frank Kent Motor Co. d/b/a Frank Kent Cadillac, No. 10-0687, concerned an employee who had worked for is employer for more than 28 years.  In 2008, he signed an Employee Handbook Acknowledgment & Mutual Waiver of Jury Trial (the "Waiver").  

In part, the Waiver read as follows:

"I agree that with respect to any dispute between [Frank Kent] and me to resolve any disputes between us arising out of or in any way related to the employment relationship (including, but not limited to, employment and  discontinuation of employment) before a judge without a jury. [FRANK KENT] AND EACH EMPLOYEE THAT SIGNS THIS ACKNOWLEDGMENT, RECEIVES A COPY OF THIS HANDBOOK, HAS KNOWLEDGE OF THIS POLICY, AND CONTINUES TO WORK FOR [FRANK KENT] THEREAFTER, HEREBY WAIVES THEIR RIGHT TO TRIAL BY JURY AND AGREE TO HAVE ANY DISPUTES ARISING BETWEEN THEM RESOLVED BY A JUDGE OF A COMPETENT COURT SITTING WITHOUT A JURY."

Notably, the employer car dealership had previously asked the employee to sign the Waiver, and he had refused.  Why did the employee sign this time?  Because his supervisor told him that if he didn't he would lose his job.  So, he signed.  Less than a year after he signed, he was fired.

The employee subsequently sued, making claims for age discrimination, and arguing that the Waiver was signed under duress - "was not signed under circumstances which were 'knowing, voluntary and intelligent.'"  

In siding with the employer and upholding the validity of the Waiver, the Texas Supreme Court agreed with the proposition that "a jury waiver agreement that is coerced is invalid" but held that the threat to fire an employee - "[the] threat to exercise a legal right" is not "coercion that would invalidate the [Waiver]."  The Court went on:

"[A]n at-will employer's threat to exercise its legal right to terminate an employee cannot amount to coercion that invalidates a jury waiver agreement."

In reaching this conclusion, the Court stated that "an employer does not coerce an at-will employee by demanding that the employee accept new dispute resolution procedures."  The Court tied its reasoning in this case to previous challenges to arbitration clauses and plans.  See In re Halliburton Co., 80 S.W.3d 566, 572 (Tex.2002) (orig. proceeding) ("not procedurally unconscionable to premise continued employment on acceptance of an arbitration plan.").  The Court reasoned that there was no distinction between the effect of an arbitration clause on an at-will employment relationship and the effect of a jury trial waiver on the same.  As such, compelling an employee to accept a jury trial waiver as a condition of continued employment is not coercion or duress, but rather a threat to merely exercise a pre-existing legal right.  Such a contract will not be invalidated.

The text of the opinion may do so here.