Recent Case Shows Risks When Employers Fail to Sign Their Own Signature Blocks

Employment agreements—such as employment contracts, confidentiality agreements, restrictive covenant agreements, arbitration agreements, and others—often contain signature blocks for both the employee and employer.  Even when employers procure the employee’s signature, in many cases the employer signature block is left blank.  Does this pose a problem when the employer attempts to enforce the agreement?

A recent Fifth Circuit decision says that under Texas law, the answer is “yes” if language in the agreement or other circumstances indicate that the employer’s signature is necessary to form the agreement.   The case of Huckaba v. Ref-Chem, L.P., 2018 WL 2921137 (5th Cir. June 11, 2018) involved an employer’s attempt to enforce an arbitration agreement with an unsigned employer signature block.  The court noted that whether a signature is required to form an agreement is dependent on the parties’ intent.  Signatures are not required when the employee and employer have given their consent to the agreement and there is no evidence that the parties intended that both signatures would be required.

In the case at hand, the court found that the arbitration agreement indicated that both signatures were required based on the following evidence:

  • A statement that “[b]y signing this agreement the parties are giving up any right they may have to sue each other”;
  • a clause prohibiting modifications unless they are “in writing and signed by all parties”; and
  • the employer signature block itself.

Notably, the fact that the agreement also contained a statement that the employee’s continued employment constituted consideration for the agreement was not enough for the court to conclude that no employer signature was required.  The court indicated, however, that had the agreement contained language indicating that continued employment constituted the employee’s acceptance of the agreement (not merely consideration), the result might have been different.

The Bottom Line for Employers

The Huckaba decision involved Texas contract law, and other states’ laws on this issue may be different.  But as to agreements covered by Texas law, and in the wake of this decision, employers should carefully consider whether an employer signature block in its agreements is needed.  Texas law is clear that an employer may bind an employee to an agreement without the company’s signature as long as there are other indications that the employer intended to be bound, such as when the employer offers the agreement to the employee and indicates that either the employee’s signature or continued employment will equal acceptance of the offer, thereby creating a binding agreement.

If the employer deems it necessary to include an employer signature block, it should implement protocols to assure that an employer representative actually signs the agreement—either before the agreement is provided to the employee or after the employee returns a signed copy.