Mutual Arbitration Agreement Template
Arbitration is a common type of alternative dispute resolution (ADR). An arbitration clause can be a separate written agreement or a provision in a contract. An arbitration agreement requires the parties to resolve their dispute through arbitration.
- Arbitration is an out of court form of dispute resolution.
- A general arbitration template between an employer and an employee.
- A universal agreement that spells out the general terms and conditions typically found in arbitration agreements.
- Download your arbitration agreement template in just seconds!
What is Arbitration?
Arbitration is less formal than litigation. Hearings can sometimes be conducted over the phone or be limited to just a review of documents instead of actually appearing before an arbitrator. A third-party neutral arbitrator hears the claim and makes a final and binding decision instead of a jury. An arbitrator is usually a retired judge.
What are the Benefits of Arbitration?
There are several benefits to arbitration. Here are a few of the most common benefits of having an arbitration agreement in place:
- Cost – Arbitration is significantly less expensive than litigation.
- Timeliness – Arbitration is more expeditious than litigation, where it may take years to appear before a judge and resolve the issue.
- Convenience – Arbitration is usually more convenient for the parties because hearings may be conducted by phone. Additionally, if the parties agree, the arbitration could be based solely on the documents submitted by the parties.
- Confidential – Arbitration awards are strictly confidential. Conversely, if an action is filed in court, the information is public record unless the award is sealed by a judge.
When do you need to use a Mutual Arbitration Agreement?
Arbitration agreements are frequently used between employers and employees. They are also seen in consumer agreements. For example, many arbitration provisions can be found in mortgage agreements, automobile contracts, credit card company terms and conditions, internet provider terms of service, and many more in the consumer sector.
Employers usually present an arbitration agreement before the employee’s official start date. This allows the employer and employee to discuss the agreement. It also provides an opportunity for the employee to review the agreement and seek outside legal advice. The employee must be aware that they are agreeing to arbitration.
Sometimes employers decide to incorporate an arbitration later into the employee’s employment with the company. If the employer chooses to have an employee sign an arbitration agreement under these circumstances, the employee should be explicitly aware of their agreement to arbitrate and have ample opportunity to review the agreement. The parties must both agree to arbitrate any disputes, and it must be signed and dated by both parties.
What are the Important Elements of an Arbitration Agreement?
The goal of an arbitration agreement or arbitration clause is to be enforceable. If it is questionable, it may go to court for a judge to determine its enforceability. That would defeat the purpose of arbitration because you are incurring court costs and losing valuable time. Here are some important elements of a general arbitration agreement?
- Parties – The employer’s registered company name and the employee’s legal name should be clearly and accurately included in the arbitration agreement.
- Notice – An arbitration agreement should consist of a notice provision. The notice provision requires the party initiating arbitration to provide a 30 days notice to the other party of their intention. This allows the other party an opportunity to resolve before proceeding to arbitration. The agreement should also identify the employer’s registered agent or authorized person to accept notice on the company’s behalf. The address of where the initiating party should send notice to should also be listed in the agreement.
- Opt-Out – Generally, an arbitration agreement includes a section that requires that the employee has 15 days from the receipt of an arbitration agreement to opt-out. An employer may make arbitration a condition of employment, but it does allow an employee to negotiate the terms of arbitration such as cost, location, etc.
- Governing State – This is a crucial section of an arbitration agreement. It establishes which state the agreement is to govern the agreement.
Common Mistakes in Arbitration Agreements
It is critically important to make sure your arbitration agreement is enforceable and legally binding. The agreement should be fair for the parties. If it is too onesided or is considerably more favorable to the employer, a judge may find that the arbitration agreement is unenforceable. The parties should sign and date the arbitration agreement, and the employee should have time to review the agreement.
It is essential to consult an attorney to address the rules of arbitration in your state. An attorney can advise you on all of the ins and outs of arbitration and if it is the best form of dispute resolution for your company.
How do I get my Arbitration Agreement Signed?
The easiest way to create your arbitration agreement signed is right here! ApproveMe’s E-Signature WP tool will change the way you get your important documents signed!
Where Can I Learn More About Arbitration?
Arbitration is a popular way to resolve a dispute without going to court. While it has its benefits, it also has some disadvantages. An arbitrator’s decision is final and binding. It isn’t easy to appeal an arbitrator’s decision. To learn more about arbitration, check out the below resources:
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MUTUAL ARBITRATION AGREEMENT
This Mutual Arbitration Agreement (“Arbitration Agreement”) is entered into and by and between ______________________(“Employer”), and the undersigned Employee (“Employee”) as of the date of Employee’s signature below.
As a condition of employment, or continued employment, with Employer or its subsidiaries or affiliates, and in order to avoid the burdens and delays associated with court actions, the undersigned Employee and Employer voluntarily and knowingly enter into this Mutual Arbitration Agreement (“Arbitration Agreement”):
(a)Except as provided herein, Employee and Employer, on behalf of their successors, affiliates, heirs, and assigns, both mutually agree that any and all disputes and claims between them, including those concerning the Employee’s employment with Employer and any separation therefrom, and extending to including claims by Employee against Employer’s subsidiaries, affiliates, directors, agents, or employees shall be exclusively determined by final and binding arbitration before a neutral arbitrator as described herein, and that judgment upon the arbitrator’s award may be entered in any court of competent jurisdiction. Claims subject to arbitration under this Arbitration Agreement include, without limitation, any claims for discrimination, retaliation, harassment; overtime, wages, benefits, or other compensation; any breach of express or implied contract; violation of personal injury; public policy; and other tort claims including fraud defamation, and emotional distress. Except as otherwise expressly provided herein, Employer and Employee voluntarily waive any and all of their rights to trial in a court of law before a judge or before a jury on all claims between them.
(b)The only actions and disputes excluded from this Arbitration Agreement are: (i) claims by Employee for workers’ compensation or unemployment benefits; (ii) claims by Employee for benefits under an Employer program or plan or that provides its own process for dispute resolution; (iii) claims by Employer or Employee for injunctive or declaratory relief concerning a confidentiality, non-solicitation, non-competition, or similar obligation (any such proceedings will be without prejudice to the parties’ rights under this Arbitration Agreement to obtain additional relief in arbitration with respect to such matters); (iv) any other claim which by law cannot be subject to an arbitration agreement; and (v) actions to enforce this Arbitration Agreement, compel arbitration, or enforce or vacate an arbitrator’s award under this Arbitration Agreement. Such actions are to be governed by the Federal Arbitration Act, and the law of the state of__________, both of which the parties agree shall apply to and govern this Arbitration Agreement and its enforceability. To the extent, there is any conflict between federal and __________law, __________ law shall control. By agreeing to submit claims to binding arbitration, the aforementioned Employee does not waive his or her right to file an administrative complaint with the appropriate agency (e.g., the Equal Employment Opportunity Commission or state agencies of a similar nature), but does knowingly and voluntarily waive his or her right to file, or seek or obtain relief in, a civil action of any nature seeking recovery of money damages or injunctive relief against Employer, except as described above.
(c) A party wishing to initiate arbitration must provide sufficient notice to the other party in writing by hand delivery or certified mail. The notice must identify the party requesting arbitration by name, home, and work address, and telephone number. The notice must describe the facts upon which the claim is raised, the persons involved, and the date and location of any instances giving rise to the claim, and describe the remedy requested. Notice to Employer must be sent to ____________________________________(Company Representative or Registered Agent) at ___________________________________________________________________________.Notice to Employee must be sent to Employee’s most recent residence address reflected in Employer’s personnel records.
(d) Within thirty (30) days of receipt of a notice of arbitration, the parties will select a mutually agreeable arbitrator. The arbitration will be held in or near the city in which Employee is or was last employed by Employer. The arbitrator selected by the parties will administer the arbitration according to the National Rules for the Resolution of Employment Disputes (or successor rules) of the American Arbitration Association (“AAA”) except where such rules are inconsistent with this Arbitration Agreement, in which case the terms of this Arbitration Agreement will govern. If the parties are unable to agree on an arbitrator, the party requesting arbitration can submit the matter to AAA, and an arbitrator will be selected pursuant to AAA’s processes. AAA’s rules and procedures can be found at www.adr.org or can be requested from Employer.
(e)The arbitrator’s authority and jurisdiction will be limited to determining the matter in dispute consistent with controlling law and this Arbitration Agreement. Except as otherwise provided herein, the arbitrator shall apply the substantive law of the state in which the claim(s) arose and/or federal law, as applicable. The arbitrator will have the same authority to decide dispositive motions and order remedies (e.g., compensatory, emotional distress, punitive damages, equitable relief, etc.) as would the court or agency that would have had jurisdiction to adjudicate the claim(s) in the absence of this Arbitration Agreement. The arbitrator shall not have the authority to hear disputes not legally recognized and shall dismiss any such claims upon motion by either party in accordance with accepted summary judgment standards of the applicable jurisdiction.
(f) Arbitration allows Employers and Employees to work with each other to resolve any disputes as quickly and efficiently as possible. In this spirit, the parties agree that this Arbitration Agreement prohibits the arbitrator from consolidating the claims of others into one proceeding, to the maximum extent permitted by law. This means that an arbitrator will hear only individual claims and does not have the authority to fashion a proceeding as a class or collective action or to award relief to a group of employees in one proceeding, to the maximum extent permitted by law. Employee will not be discharged, disciplined, or otherwise retaliated against for exercising his or her rights found under Section 7 of the National Labor Relations Act. The Employer may use this Arbitration Agreement to defeat any attempt by Employee to file or join other employees in a class, collective, or joint action lawsuit or arbitration, but Employer shall not retaliate against Employee for any such attempt.
(g) The arbitrator will not have the authority to order any remedy that a court or agency would not be authorized to order. The arbitrator will render a written award setting forth the arbitrator’s findings of fact and conclusions of law. If Employer and Employee disagree over issues concerning the formation or meaning of this Arbitration Agreement, the arbitrator will hear and resolve these arbitrability issues.
(h) Employer will pay all costs unique to arbitration (in comparison to the costs of adjudicating the same claims before a court or relevant agency), including the customary and regular arbitration fees and expenses. However, if Employee is the party initiating the claim, Employee will be responsible for contributing an amount equal to the filing fee to initiate the claim in the court of general jurisdiction in the state in which Employee is or was last employed by Employer. Each party will be responsible for paying its own attorneys’ fees and any costs that are not specifically unique to the arbitration (costs that each party would incur if the claim(s) were litigated in a court or relevant agency such as costs to issue subpoenas and/or documents; take depositions and purchase transcripts; copy documents; etc.). Any dispute as to where a cost is special to the arbitration, it shall be resolved by the arbitrator. The arbitrator may award reasonable fees and costs or any portion thereof to the prevailing party to the same extent a court or agency would be entitled to do so, in accordance with applicable law.
(i)This is the complete agreement between the parties on the subject of arbitration and supersedes any other understandings on the subject. No representations, oral or written, are being relied upon by either party in executing this Arbitration Agreement, other than those contained herein. This Arbitration Agreement will remain in effect even after the termination of Employee’s employment with Employer. Should any provision of this Arbitration Agreement be deemed invalid or unenforceable, such provision shall be modified and reformed to the minimum extent necessary to render the Arbitration Agreement valid and enforceable. If a provision cannot be modified, it will be deemed ineffective to the minimum extent necessary to allow the remaining provisions to be valid and enforceable. This Arbitration Agreement shall be construed as a whole, according to its fair meaning, and not for or against any party.
(j)Employee may opt-out of this Arbitration Agreement by delivering, within fifteen (15) days of the date, this Arbitration Agreement is provided to Employee, a completed and signed Opt-Out notice to Employer. If Employee does not deliver the notice within fifteen (15) days, and if Employee continues or accept employment with Employer after that date, Employee will be deemed to have accepted the terms of this Arbitration Agreement.
(k) This Arbitration Agreement may be modified or terminated only by a writing accepted by Employee and signed by a senior officer of Employer, or by Employer after thirty (30) days’ written notice to Employee. Any modification or termination of this Arbitration Agreement shall be prospective only and shall not apply to any claims or disputes that are pending in arbitration or that have been initiated by either party pursuant to this Arbitration Agreement prior to the expiration of the thirty (30) day period.
(l)Employee warrants and agrees that he or she has read and understands this Arbitration Agreement and has been afforded the opportunity to consult with an attorney of Employee’s own choosing regarding the effect of this Arbitration Agreement to the extent Employee deems necessary.
(m) By signing this Arbitration Agreement, Employee acknowledges that he or she is knowingly and voluntarily waiving the right to file a lawsuit or other civil proceeding relating to Employee’s employment with Employer as well as the right to resolve disputes in a proceeding before a judge or jury, except as described above. Employee further acknowledges and agrees that this Arbitration Agreement, while mutually binding upon the parties, does not constitute a guarantee of continued employment for any fixed period or under any particular terms except those contained herein, and does not alter in any way the at-will nature of Employee’s employment relationship.
Employer Representative’s Signature
Employer Representative’s Name
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