HR Management & Compliance

How To Craft Airtight Arbitration Agreements


Yesterday, we looked at a recent California court case that highlighted the various factors you need to think about when you draft your arbitration agreements—as well as how you present them to employees. Today, some tips for success.

[click here for the facts of the case]

How To Get Proper Employee Consent

The Court of Appeals in this case focused largely on how the employer went about obtaining its employees’ consent to arbitration. How can you get consent in a way that will stand up in court?

Make It Obvious

To begin with, make sure you provide notice of the mandatory arbitration requirement on all standard employment applications and in written offers of employment.

The mistake AccentCare made wasn’t necessarily that it included the agreement in the job application; rather, it was slipping the agreement in among other standard provisions and making it “take-it-or-leave it.” Instead, employers should bring arbitration requirements to applicants’ attention, give them time to review the requirements, and be willing to discuss and explain them.

Your applications and offers should also clearly refer to a separate document with the arbitration agreement, procedures, and rules. New employees should sign a waiver forfeiting their right to pursue claims covered by the agreement in court and acknowledging they received the arbitration document.


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The Bare Minimum

When it comes to the terms of the agreement itself, California courts have established that enforceable arbitration agreements must, at a minimum:

  • provide for neutral arbitrators
  • provide for adequate discovery of facts and evidence by both parties before arbitration
  • require a written arbitration decision that will allow a court to review the decision
  • provide for all remedies that would be available in court
  • not require employees to pay unreasonable costs or arbitration fees (an employee’s expenses shouldn’t unreasonably exceed those that would be incurred pursuing a lawsuit in court)
  • provide for mutuality (meaning both parties have to pursue claims arising out of the employment relationship in arbitration, not the courts)

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2 thoughts on “How To Craft Airtight Arbitration Agreements”

  1. One thing I’ve noticed coming up again and again in these cases is that the agreements are invalidated when employers fail to provide employees with a copy of the applicable arbitration rules, or at least info on how to access those rules (e.g., a URL).

  2. One thing I’ve noticed coming up again and again in these cases is that the agreements are invalidated when employers fail to provide employees with a copy of the applicable arbitration rules, or at least info on how to access those rules (e.g., a URL).

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