Occupational Injury Plans and Arbitration Agreements in Employment Contracts

by Paul H. Cannon on Feb. 11, 2017

Accident & Injury Personal Injury Accident & Injury  Wrongful Death 

Summary: Be aware that employers who offer alternative plans to workers compensation often require you to waive your right to sue them and go to arbitration instead when you sustain a work injury.

Occupational Injury Plans and Arbitration Agreements In Employment Contracts

The State of Texas is unique in many ways. One place we are truly unique is when it comes to worker's compensation law. Unlike all the other 49 states in the union, Texas does not require employers to provide workers compensation coverage.  However, Texas does penalize employers by making the employer waive all of their common law defenses when an employee is injured on the job and there is no worker's compensation coverage in place.

Alternative Plans Do Not Provide the Same Coverage

To avoid the harsh penalties imposed on those who do not protect employees against a workplace injury, many employers provide cheaper and less expansive injury plans to their employees and force their employees to sign a waiver of their right to sue in favor of going to arbitration. These plans are cheaper because they do not provide anywhere near the same type of benefits to an injured employee that Texas Worker's Compensation Insurance provides.

Waiver Of The Right To Sue the Employer

 In addition to offering a separate type of injury coverage, the employers typically include a provision that requires the employee to arbitrate his claims arising from an on the job accident. This means he is waiving his right to sue in exchange for the benefits of the occupational injury plan and arbitration as a means to resolve any other claims for pain, suffering, scarring, disfigurement, or other economic losses not covered by the plan.

Courts Defer to Arbitrator Where Arbitration Agreements Can Be Modified

Texas Law generally favors enforcing arbitration agreements. However, there are certain limitations. The agreement cannot force a plaintiff to completely waive a right or remedy they have under the law without being provided an alternate means to redress the right or remedy waived.  One way these agreements attempt to do this is by forcing the Plaintiff into arbitration and then limiting the normal tools of discovery so that Plaintiff cannot prove his/her case. The in the case of In re Poly-America, L.P. 262 S.W.3d 337 (Tex.2008), the Texas Supreme Court held that: "if the discovery limitations of the Arbitration Agreement imposes operate to prevent effective presentation of [Plaintiff's] claim they would be unenforceable." Id. at  358.  That case, however, did say that so long as the arbitrator had a way to change the agreement so as not to enforce the unenforceable restrictions, the Courts would not declare the entire agreement unenforceable.

Understand Before You Sign An Arbitration Agreement

If you are going to work in Texas, you should read all the papers you are handed to sign carefully.  If there is an arbitration agreement or an alternate form of work injury insurance other than worker's compensation coverage, you should discuss the meaning of the agreement before you sign away your rights.  Call an attorney who handles workplace injury arbitrations and know what you are in for in the event you are injured on the job.


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