Employment Arbitration Agreement

Drafts a mutual arbitration agreement for employment relationships, balancing employer protections with procedural fairness to survive unconscionability challenges.

Prerequisites

Collect before drafting:

Jurisdiction(s) — employee work state(s) (drives unconscionability standards, PAGA treatment)
Employee type — prospective vs. current (consideration analysis); executive vs. general
Existing documents — offer letter, handbook, prior arbitration agreements, equity plans
Administrator — JAMS or AAA (determines rule set)
Company entity — full legal name

Output Structure

1. Recitals & Parties

| Element | Requirement | |---|---| | Parties | Full legal entity name + employee full legal name | | Effective date | Specify; clarify current vs. prospective employment | | Consideration | Prospective: employment itself. Current: independent consideration required (bonus, equity, continued employment per state law) | | Mutual obligation | Both parties bound — required for enforceability |

2. Covered Claims

Draft broad coverage with specific enumeration and "illustrative, not exhaustive" language:

Statutory: Title VII, ADEA, ADA, GINA, FLSA, state equivalents
Wage & hour: overtime, meal/rest breaks, misclassification, commissions
Common law: wrongful termination, breach of contract, implied covenant
Retaliation: any statute or public policy
Post-employment: trade secrets, non-competes, non-solicits
Temporal scope: before, during, and after employment

3. Excluded Claims & Carve-Outs

| Exclusion | Reason | |---|---| | Workers' comp, UI | Statutory administrative schemes | | ERISA benefits | Conflicts with statutory procedures | | Trade secret/non-compete injunctions | Employer needs immediate judicial remedy | | NLRB charges | Protected concerted activity | | Agency charges (EEOC, state) | Filing right preserved; individual damages arbitrated | | PAGA (CA) | Individual PAGA to arbitration; representative PAGA per Viking River Cruises v. Moriana / Adolph v. Uber [VERIFY current standing] | | Auto-exemption savings clause | Any claim court determines non-arbitrable |

4. Arbitration Procedures

Administrator:    [JAMS / AAA]
Rules:            [JAMS Employment / AAA Employment Rules]
Arbitrator:       Single neutral; retired judge or 10+ yr employment attorney
Location:         Metro area where employee works/worked
Panel threshold:  Three arbitrators if claim > $250,000 (optional)
Fallback:         Administrator unavailable → mutual selection → court appointment

Discovery (critical for enforceability):

5 depositions per side presumptive; more on good cause
Document requests, interrogatories, expert discovery permitted
Arbitrator resolves disputes and may sanction abuse

Arbitrator authority:

All court-available remedies (compensatory, punitive where authorized, injunctive, declaratory)
Written decision with findings of fact and conclusions of law
Must apply substantive law; may rule on dispositive motions
May NOT consolidate without written consent or award relief to non-parties

5. Cost Allocation

| Cost | Allocation | |---|---| | Employee filing fee | Capped at local court filing fee (~$200–$400); Company advances on hardship | | Administrator/arbitrator fees | Company pays | | Attorney's fees | Each bears own; statutory fee-shifting if employee prevails | | Company prevailing | No fee recovery unless frivolous/bad faith | | Transcript | Ordering party; Company if arbitrator requires | | Savings clause | If unenforceable → reform to minimum; presume Company bears disputed costs |

6. Waivers

Jury trial waiver:

ALL CAPS or bold — must be conspicuous
Mutual; separate signature/initial line; acknowledgment of understanding

Class/collective action waiver:

Individual claims only; no class, collective, or representative proceedings
If waiver invalidated → that claim severed to court; rest stays in arbitration
Employee election: if class waiver struck, employee may void entire agreement

7. Employee Acknowledgments

[ ] Received complete copy
[ ] Adequate review period (5 business days prospective; 21 days current)
[ ] Opportunity to consult attorney
[ ] Understands jury trial and class action waivers
[ ] Waiving forum, not substantive rights
[ ] Condition of employment (if applicable — state clearly)
[ ] Revocation period per state law (typically 7 days)
[ ] E-SIGN compliance language if electronic

8. General Provisions

| Provision | Content | |---|---| | Governing law | FAA (9 U.S.C. § 1 et seq.) for enforceability; state substantive law for underlying claims | | Severability | Sever invalid provisions; reform to minimum enforceable extent | | Integration | Entire agreement re: arbitration; supersedes prior terms; mutual written consent for modifications | | Survival | Survives termination; binds successors, assigns, heirs; enforceable in bankruptcy |

9. Signature Block

Employee and Company representative: signature, printed name, date (+ title for Company)
Separate initial lines for jury trial waiver and class action waiver
E-SIGN acknowledgment block if electronic
Confirmation employee received executed copy

Enforceability Checks

Armendariz requirements (CA and following states) — all five required:

Mutual obligation to arbitrate
Adequate discovery rights
No limitation on statutory remedies
Employer bears arbitration costs
Written reasoned decision

Key statutes and cases:

Ending Forced Arbitration Act (9 U.S.C. § 401–402): invalidates pre-dispute arbitration for sexual assault/harassment claims [VERIFY current scope]
Viking River Cruises v. Moriana (2022) / Adolph v. Uber Technologies (2023): individual PAGA compellable; representative standing may survive [VERIFY]
Current-employee consideration: varies by state — some accept continued employment, others require independent consideration

Pitfalls

Do NOT include unreasonably short limitations periods, one-sided discovery, or prohibitive costs — unconscionability risk
Do NOT restrict employee's right to discuss wages/working conditions (NLRA § 7)
Do NOT draft without researching jurisdiction-specific enforceability standards
Use plain language accessible to non-lawyers; defined terms used consistently