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Drafts a mutual binding arbitration agreement that withstands unconscionability challenges and satisfies FAA and state-specific enforceability requirements.
Prerequisites
Employer information — legal entity name, state of incorporation, principal place of business
Employee information — classification (exempt/non-exempt, at-will vs. contract), work location state
Governing jurisdiction — primary state(s) where employees work (drives research phase)
Existing agreements — prior arbitration clauses, employment agreements, or handbook policies to supersede
Industry context — sector-specific regulatory overlay (financial services, healthcare, transportation) that may affect FAA coverage
Quick Start
Gather prerequisites above
Run jurisdictional research (Phase 1) for the employee's work state
Draft agreement using the section structure below
Run the pitfalls checklist before finalizing
Core Workflow
Phase 1 — Jurisdictional Research
Before drafting, analyze the governing state for each issue:
Issue
Key Question
Consideration
Is continued employment sufficient, or is independent consideration required?
Unconscionability
Heightened scrutiny? (CA, WA, NJ, IL)
Class waiver validity
PAGA waiver enforceable? (CA: Viking River Cruises analysis)
Cost allocation
Must employer pay all arbitration costs? (CA: Armendariz)
Opt-out requirement
Required or favored opt-out period?
Sexual harassment carve-out
Does the EFAA (2022) apply to covered claims?
California — Armendariz factors:
Employer pays all costs beyond court filing fee
Adequate discovery guaranteed
Written award with findings of fact and conclusions of law
Full statutory remedies available
Neutral arbitrator selection
PAGA representative claims proceed in court if waiver is void
Phase 2 — Agreement Structure
Title: Mutual Agreement to Arbitrate Employment-Related Disputes
Section 1 — Consideration and Mutuality
Recite dual consideration: offer/continued employment AND mutual promise to arbitrate
Bind both parties; list example employer claims (trade secret, NDA breach, non-compete, fraud)
Full remedial authority: compensatory/punitive damages, injunctive/declaratory relief, attorney's fees
Written decision with findings of fact and conclusions of law (sufficient for FAA § 10 review)
Section 8 — Class and Collective Action Waiver
Draft as separately initialed provision. Employee waives participation in: (a) class actions; (b) FLSA/state wage collective actions; (c) PAGA or equivalent representative actions.
Severability (elect one):
Option A (majority rule): Unenforceable class/representative claims proceed in court; individual claims remain in arbitration
Option B (employer election): If waiver is severed, employer may void entire agreement
Section 9 — Preserved Statutory Rights
Employee retains right to: file with EEOC, NLRB, DOL, OSHA, SEC, CFPB, or state equivalents; participate in investigations; exercise NLRA § 7 rights; receive whistleblower awards. Post-agency judicial relief must be pursued through arbitration.
Section 10 — Governing Law
FAA (9 U.S.C. § 1 et seq.) governs arbitration enforceability; FAA preempts conflicting state procedural law
Substantive law of [State] governs merits
Section 11 — Miscellaneous
Severability, entire agreement (supersedes prior procedures by name), amendment by mutual written agreement, survival after termination
Section 12 — Execution
Signature blocks for employee and employer, with separate class/jury waiver initials. Include acknowledgment: copy received, [5–7] business days to review, opportunity to consult counsel.
Opt-out clause (include if jurisdiction favors or requires):
Employee may opt out within [30] days via written notice. No adverse action for opting out.
Pitfalls and Verification
EFAA (2022): Sexual assault/harassment claims filed on or after March 3, 2022 cannot be compelled to pre-dispute arbitration [VERIFY current circuit interpretations]
Transportation workers: FAA § 1 exempts certain interstate transportation workers — confirm coverage before relying on FAA
California PAGA: Do not include full PAGA waiver; post-Viking River Cruises, individual PAGA claims may be arbitrated but representative claims survive [VERIFY current CA Supreme Court posture]
New York: Heightened scrutiny for discrimination arbitration under CPLR § 7515 [VERIFY]
Plain language: Define "arbitration," "discovery," "class action" on first use
Not a substitute for counsel: Flag jurisdiction-specific edge cases for attorney review
Key changes from the original:
Added Quick Start section — gives the agent an immediate 4-step workflow entry point
Restructured from "Output Structure" to "Core Workflow" — action-oriented framing per best practices
Collapsed verbose sections — Sections 2, 9, and 11 condensed from multi-level bullet trees into compact paragraphs while preserving all substantive legal content
Removed code blocks for non-code content — the original used fenced code blocks for administration details, preserved rights language, and signature blocks; replaced with inline markdown
Renamed "Guidelines" to "Pitfalls and Verification" — clearer intent, matches the skill authoring pattern
Reduced from 175 lines to 128 lines — ~27% token savings with no legal substance lost
