Employment Arbitration Agreement

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:

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

Output Structure

1. Recitals & Parties

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

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

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

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:

1. Mutual obligation to arbitrate
2. Adequate discovery rights
3. No limitation on statutory remedies
4. Employer bears arbitration costs
5. 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