Court: Texas Companies Can Force Binding Arbitration

May 31, 2002 ( - An alternative dispute resolution program at Halliburton Co. got a boost with a Texas Supreme Court decision affirming an employer's right to force workers to settle employment disputes through binding arbitration rather than in court.

Although union officials blasted the ruling for giving companies too much of an upper hand, Halliburton officials defended their Dispute Resolution Program, which has covered most of the Houston company for the last nine years, according to a Houston Chronicle news report.

The company said its arbitration system was not unfair because the company agreed to pay all costs, except for a $ 50 filing fee, and to provide the employee with up to $ 2,500 for a lawyer. The program also provides for both parties to participate in selecting a neutral arbitrator.

Halliburton said workplace dispute programs involving binding arbitration have gotten the US Supreme Court’s stamp of approval in several decisions in the last 10 years.

However, the Texas AFL-CIO said the state high court decision gave employers too much power and forced workers to give up the constitutional right to a day in court.

“The case, which involved Halliburton Co. at the time (now vice president) Dick Cheney was CEO, holds that all a company has to do to avoid employment-related lawsuits is to tell employees that their continued employment is conditioned on agreeing to an in-house dispute resolution program that is rigged in the company’s favor,” said Joe Gunn, president of the Texas AFL-CIO.

The union official contended the ruling came about because all the justices’ campaigns for office have been financed by business.

Ruling Background

At issue was a November 1997 employee notice that said Halliburton was adopting a dispute resolution program in which both the company and workers would waive the right to trial by jury in favor of binding arbitration.
Any employee who continued to work after January 1, 1998, agreed to abide by the program, the notice said.

“While both you and Halliburton retain all substantive legal rights and remedies under this program, you and Halliburton are both waiving all rights which either may have with regard to trial by jury for employment related matters in state or federal court,” the brochure said, according to the court opinion.

James Myers, a 30-year employee of Brown & Root Energy Services, admitted receiving the notice, but he said he did not understand what it meant.

In 1998, Halliburton demoted Myers from his job as a general welding foreman because of “a lack of interpersonal skills.” Myers sued, claiming the real reason was discrimination because of his race and age.

Halliburton asked a trial court and a state appeals court to throw out Myers’ case as a violation of the arbitration agreement, but both refused. The Supreme Court ruled in Halliburton’s favor with its recent decision.

The court said a 1986 Texas Supreme Court opinion said it was legal for employers to change employment contracts based on the idea that an employee who continued to work past a certain date was accepting the new contract’s terms so long as the worker was given adequate notice.

The court said the notice sent to Myers met this test.