Things to Consider When Using an Arbitration Agreement Template
While it is fairly common to see arbitration clauses in many consumer and employment contracts, using a stand-alone agreement is not unheard of. These are especially common when discussing the need for future arbitration between employers and employees.Download Template
Using an arbitration agreement template is easier than attempting to work with an attorney to draw up individual agreements. Our arbitration agreement templates can be fully customized to allow you to tailor them to your needs.
Here is What We Will Cover Below:
- Typical Arbitration Agreement Uses
- When Arbitration Cannot Be Used
- Considerations for Arbitration
- Additional Resources
Typical Arbitration Agreement Uses
Employers often ask an employee to sign a stand-alone arbitration agreement as a condition of employment or a condition of continued employment. These agreements are intended to avoid the high cost of taking a dispute between employers and employees to court. Some of the typical reasons why an arbitration agreement may be requested for any of these possibilities
- Personal injury claims
- Accusations of discrimination, retaliation, or harassment
- Breach of contract
- Disputes over wages, benefits, or overtime pay
- Tort claims
The general theory behind an arbitration agreement is both parties to the agreement (normally an employer and employee) agree they will settle the matter using a neutral third-party instead of the courts. This means the party who is requesting the arbitration (either employer or employee) is also waiving their right to a jury trial.
When Arbitration Cannot be Used
There are specific instances where an arbitration agreement cannot supersede the rights which are held by the employee or specific rights of an employer. These include:
- When an incident involves solicitation, competition, or breach of confidentiality which are generally covered under non-disclosure agreements (NDA).
- When employee benefits under plans or programs in which there is an existing dispute resolution plan are in question.
- When the dispute involves workers compensation or unemployment benefits which the employee has applied for.
Typical Arbitration Clauses
In general an arbitration agreement will contain the following clauses. When using an arbitration agreement template, you should make sure the language contained in these clauses meet your goals:
- Name and locations of both parties
- Acceptance that agreement is mutual
- Acknowledgement of conditions associated with agreement
- Paragraph explaining who is bound by agreement (parties plus assigns, heirs, subsidiaries, affiliates etc.)
- Exclusions to arbitration
- Jurisdiction (typically location of employer)
- Acknowledgement of rights to file administrative claims with EEOC
- How, when, and where to notify parties of intent to seek arbitration
- Process including time frame after notification of intent to seek arbitration
- How arbitrators are to be selected
- Arbitrator’s authority and jurisdiction
- Acknowledgement of employee’s rights under Section 7 of the National Labor Relations Act
- Payment of costs associated with arbitration
- Attorney fees associated with arbitration
- Acknowledgement of potential of invalid or unenforceable clauses which would leave balance of agreement intact
- Opt-out clause
- How to modify the arbitration agreement
Considerations for Arbitration
Arbitration offers unique benefits. Not only is this process more cost effective than a court, it is also private. Unlike a court process which is conducted in public, the arbitration process is conducted privately. When using an arbitration agreement template, there are a few things which must be made clear:
- Arbitrators should be neutral. Either party to the agreement should be able to refuse to deal with an arbitrator who has a conflict of interest.
- Arbitration must be fair. The outcome of an arbitration must be similar to what the outcome would be if the person who was wronged went to court.
- Employee rights must be clear. The employee must be informed they may have the agreement reviewed by legal counsel before signing. They must also be aware they may consult an attorney to aid them with the arbitration process at their own expense.
- American Arbitration Association®
- Alternate Dispute Resolution Handbook
- Mutual Agreement to Arbitrate Claims: Everything You Need to Know
- Original Federal Arbitration Rules (1925)
- Section 7 of the National Labor Relations Act
Obtaining Signatures to Facilitate Enforcement
As with any legal document, signatures signify the acceptance of an agreement. The signatures allow both parties to bind the other to the agreement in question. Once you have completed the tailoring of the arbitration agreement template to suit your needs, you will have to facilitate the signing of the document. This does not always require both parties to be in the same location.
Rather than wait for both the employer and employee to be in the same location, you can use a secure document signing process. Done through Nitro Sign, both employer and employee can sign the document and make it accessible to the other signor. Try Nitro Sign today for free; use this system for your completed arbitration agreement and all important contracts and agreements.