Arbitration Agreements and Texas Work Injuries: What You Gave Up, What You Didn’t, and What Happens Next

If you signed an arbitration agreement when your Texas employer hired you and now you have a work injury, the short answer to whether you can still sue is probably no. Not in court, anyway.

But that is the short answer. The longer one is more useful.

A vast majority of “non-subscriber” employers in Texas (a “non-subscriber” is a business that has opted out of the state traditional workers’ compensation system) require employees to sign arbitration agreements as a condition of their employment. As you know, you typically have no say as to whether you sign one or not if you want the job. But what happens if you did sign one and then you were hurt at work?

Good question. Let’s dive in.

What Is an Arbitration Agreement?

An arbitration agreement in Texas is a private contract between you and another party (in this case your employer), where you both agree to resolve any legal disputes through a private adjudication process called an “arbitration”.

In plain English, Arbitration is a private trial without a jury.

There are several important differences between arbitration and a lawsuit:

1. Instead of twelve people from your community hearing what happened to you, a single arbitrator hears the case.
2. The arbitrator is usually a retired judge or a civil litigation attorney with experience in injury claims.
3. Most importantly, the arbitrator is hired and paid for by your employer, not by the state.

While the intention behind arbitration is to create a neutral environment outside of court to settle legal issues, some could view some of the listed as an unfair advantage.

It’s also good to consider that your Texas employer and their lawyers have been using the same arbitration company and the same pool of potential arbitrators for years. They know, and have likely worked with, every name on that list. You, on the other hand, are coming in after a single injury and almost certainly know no one on that list.

This doesn’t mean there is no point in fighting, but it’s best to have a realistic view of the situation. It’s also one many reasons why you need to hire an experienced Houston work injury lawyer if you are facing a work-related injury arbitration. Not only will they be able to help you through the entire process, but odds are your lawyer will also know many of the arbitrators.

It’s also important to understand that the arbitration award is binding. That means whatever the arbitrator decides is final. Your only option to get around it is to file an appeal which will only be successful if there is clear evidence of corruption, fraud, bias, or the arbitrator acting completely outside their authority (all of which are unlikely scenarios).

What Are Your Options if You Signed an Arbitration Agreement

The good news is an arbitration agreement only changes where your case is heard, it does not change the law or prevent you from securing compensation.

When your employer opted out of the Texas workers’ compensation system and chose to become a non-subscriber, Section 406.033 of the Texas Labor Code automatically stripped them of three key defenses that they would otherwise normally get to use in a negligence case like yours. That is the price they had to agree to pay for getting to opt-out of the Texas workers’ compensation system.

This means they cannot argue that:

• You were partly responsible for the injury
• You accepted the dangers that come with the work as a condition of your employment
• Some coworker of yours, and not the company, was really at fault

Without these three legal defenses, it is significantly more difficult for your employer to defend. This allows you and other injured workers to walk into the arbitration hearing with a strong case and likely secure a favorable outcome.

Are Third Parties Affected by Arbitration Agreements?

If some other party aside from your employer (a third party) contributed to your injury, you can still sue them in court. Since your arbitration agreement is only between you and your employer, any third-party claims would be heard in a Texas civil court where normal personal injury and negligence laws would apply.

No arbitration agreement in your employment contract changes any of that.

Here’s an example: Let’s say a warehouse worker got hurt when a forklift malfunctioned at the company receiving dock. Let’s further say she signed an arbitration agreement as part of her employment. She can file a claim against her employer, and that claim would go to arbitration. But she also would have a claim against the forklift manufacturer whose machine failed, and that one would go to a civil court, regardless of her arbitration agreement.

That same principle of third-party claims would also apply on construction sites where multiple contractors are present, or in distribution work where drivers can be injured at third-party facilities, or, in virtually any work setting where the person whose negligence hurt a worker is not their direct employer. Third parties often carry their own substantial insurance coverage and will have to settle any injury claims in court.

This is, again, where having an experienced Houston work injury attorney is vital. Identifying every potentially liable third party is one of the most valuable things a good work injury attorney does from day one. This ensures you truly get the maximum available compensation for injuries.

Can You Challenge an Arbitration Agreement?

Challenging an arbitration agreement is occasionally an option, but it is fairly uncommon.

If the agreement is too one-sided, or if it does not actually cover the type of claim you have, or if there was fraud or real coercion when you signed it, the agreement may not be valid. And yes, while those situations exist, they are also the exception. Texas courts have consistently enforced arbitration agreements, even when the worker had no meaningful ability to negotiate, and that describes virtually every non-subscriber arbitration agreement in Texas.

What that means practically: you do not need to assume that your arbitration agreement is automatically enforceable, but know that it probably is. If you have a question about yours, have a lawyer read what you signed and advise you on next steps.

Will Arbitration Actually Change the Outcome?

If you go into an arbitration hearing without representation, it will probably not end in your favor. Texas companies who choose to be non-subscribers did so to save money.

The biggest difference that comes with this process is that there will be no jury. In a civil trial, twelve people from your community hear the facts: what happened to you, what your recovery looked like, how the injury changed your daily life, what it cost you financially and physically. That sort of thing. Juries tend to take those facts seriously and often award appropriate compensation based on those facts (they can also be less than sympathetic to large corporations not wanting to pay for injuries).

The research on this is consistent. Arbitrators award less for “pain and suffering” than juries do.

Conversely, lost wages and medical bills are numbers that are fairly cut and dry, so awards for these sorts of damages are fairly consistent between the two. But the hard truth is that what you endured physically and emotionally, and what the injury cost your quality of life, generally comes out lower in arbitration.

The other practical differences between arbitration and a civil trial are privacy and speed. Arbitration is confidential: what happens in the hearing room does not become part of the public court record. That is generally good for both parties. And arbitration typically resolves faster than civil litigation, sometimes by a year or more. That too is usually good news.

But, despite those secondary benefits, not having a jury hear your case is what will cost you, and knowing that going in is better than learning it at the end.

Why a Lawyer Matters More in Arbitration

If you are thinking that arbitration is somehow simpler than a lawsuit and you can navigate it alone, that is exactly backwards. There are several things that make being unrepresented a bad idea.

The first is arbitrator selection. At the start of every arbitration, both sides choose from a panel list provided by the arbitration company. As mentioned, your employer’s lawyers have seen every name on that list in prior cases. They know reputations, tendencies, style, quirks, and general outcomes of the different arbitrators.

You do not. But do you know who else knows these things?

That’s right, an experienced non-subscriber work injury lawyer who has argued many a Texas case before these very arbitrators. Your lawyer will know the panel too. They will know the quirks and nuances too. So that seemingly simple decision, who will hear your case, can quietly determine how the whole thing unfolds.

The second reason why having a lawyer makes a difference is evidence control. The rules of evidence technically apply in arbitration, but there is no judge to enforce them, only the arbitrator. And when your employer’s lawyers attempt to push something into the record that a judge would have excluded, you will need an attorney to be able to recognize that and object effectively.

The third benefit of having a solid lawyer is leverage. Prior to the case going to arbitration, settlement discussions typically occur. The problem is that the only real pressure point an injured worker has in that negotiation is the credible threat that their case is in the hands of a law firm that actually tries these sorts of cases and wins them. An insurance adjuster knows which plaintiff’s firms are serious and which are not. A demand from a firm with a demonstrated track record of success in this work carries weight that a self-represented worker’s demand simply does not.

And naturally, that affects how quickly and seriously the other side takes any offers. If they know you have a top-notch law firm behind you, you can bet they will be much more inclined to settle your case prior to the actual arbitration.

At Armstrong Lee & Baker LLP, a significant portion of the non-subscriber work injury cases we handle are assigned to arbitration because so many of Texas’s largest employers use these agreements. We know how the process works, we know the arbitrators, we know how to get large settlements, and we know how to build a case that produces serious results when they do end up in front of an arbitrator.

One More Thing: The Clock Is the Same

Signing an arbitration agreement did not change your legal deadline; Texas law gives you two years from the date of your injury to bring your claim, whether it goes to arbitration or a courtroom.

It’s also important to understand that waiting to file will only hurt your case, because evidence deteriorates, memories fade, and people move. The case you bring today is undoubtedly stronger than the one you would bring in eighteen months.

Your Trusted Texas Work Injury Lawyer

Our team at Armstrong Lee & Baker has handled countless work injury cases (a majority of which were arbitration cases), securing favorable outcomes for our clients. We operate on a contingency fee basis which means you will owe no fee unless we secure a settlement on your behalf.

If you have been injured in a work accident and are wondering if you have a case, give us a call today. We offer free consultations and can advise you on your options. Contact Armstrong Lee & Baker today.

Joshua Lee

Joshua Lee believes in aggressive, tough advocacy and a client-centered approach to every case. Joshua draws from a wide body of experiences and a robust understanding of the law. Joshua graduated from the New York University School of Law in New York City, which is considered among the best law schools in the world. Our lawyers have 25+ years of combined experience.

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