While employers may have well-written agreements with their employees, such as non-competition and confidentiality agreements, those same employers sometimes fall down with regard to having those contracts executed on the company’s behalf. Prudent companies will not allow employees to commence employment until they have signed the applicable employment agreement, noncompete or an agreement to resolve all issues via arbitration. This ensures that the employee is committed to those obligations and cannot, in the arbitration agreement example, later insist on litigating disputes in court in front of a jury. Those same employers, however, might simply take that contract back and drop it in the file, without countersigning it on the company’s behalf. The practice of not signing those agreements on behalf of the business might render the entire contract unenforceable.
That was precisely what happened in the recently decided case of Huckaba v. Ref-Chem, LP (5th Cir. Ct. of App. 2018). The plaintiff sought to sue her employer in federal district court even though she signed a contract that included an arbitration clause. Under that clause, all disputes between the parties would be resolved through arbitration – not in the courts. The employer, who did not want to be in federal court but instead preferred to be in mediation followed by binding arbitration, sought to dismiss the court action. The court concluded that the language of the agreement contemplated it would only be enforceable if both parties executed it. The employer had not signed the contract, but simply accepted the copy signed by the employee. As a result, the employer’s motion to force the dispute into arbitration was denied.
If you want to be certain that your company can enforce contracts signed by its employees, make sure the agreements are contemporaneously signed by it. Someone in HR should be tasked with making sure this happens. If necessary, staff may use a checklist, as they do with other forms employees are expected to sign. Executives then need to be attentive to those requests for a signature.