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Under Texas law, notice of a change in the terms of employment must be “unequivocal” to be effective, both in its nature and its certainty, according to the Fifth Circuit Court of Appeals. Accordingly, a Texas employer could not enforce an arbitration agreement where the employees were not given “unequivocal” notice of the change in terms.
In Moran v. Ceiling Fans Direct, Inc., No. 06-20810, 2007 WL 2597613 (5th Cir. Sept. 6, 2007), Moran and other employees of Ceiling Fans Direct (CFD) were presented with a new dispute resolution policy, requiring binding arbitration of employment claims. CFD presented the policy without reading it, explaining it, or mentioning that continued employment equaled consent to the new policy. Later, CFD did issue an employee handbook containing the new policy, but did not require the employees to sign the handbook.
Moran sued CFD, alleging various statutory violations stemming from overtime pay policies. CFD sought to compel arbitration of the claim, maintaining that Moran and the other employees had received notice of the binding arbitration requirement for such claims, and had accepted the modification through continued employment. The district court denied the motion to compel, finding that CFD failed to give adequate notice of the modification, and that, even if it did, the employees never accepted the terms of the new policy.
On appeal, the Court affirmed denial of the motion to compel, finding insufficient notice to employees and no acceptance by the employees. Texas law requires that an employee be given unequivocal notice of a change in an employment term. The Court found that CFD’s notice addressed the nature of the change, but not its certainty, in that CFD management told the objecting employees that they would “take care of them,” and that the employees should “not worry about it.” According to the Court, this conflicting communication produced uncertainty, which in turn rendered the notice of the change ineffective.
Furthermore, the Court observed that CFD’s failure to notify the employees of the specific terms of the modification and that acceptance was effective on continued employment precluded a finding that employees had accepted the modification.
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