Alternative Dispute Resolution (ADR)
The relationship between employer and employee is continuing and dynamic. Like a marriage, disagreements and periods of stress are inevitable. The way in which these disharmonies are handled can drive the parties further apart or serve to enhance and strengthen their overall relationship. Furthermore, the experts report that it costs the employer far less to repair a strained employee relationship than to recruit and train a replacement.
Unfortunately, our legal system is based on an adversarial model. Like a sports team preparing for a critical game, from the first day of law school our lawyers are trained to advocate totally for their client’s victory. Defenses are concocted to minimize the impact of any weaknesses in their case. The opposing side is attacked and demeaned at every opportunity. The bedrock principle underlying the adversarial means of dispute resolution is that if both parties vigorously advocate the respective claims of their clients to the max, the most just resolution of their dispute will result.
Applying our traditional legal adversarial system to workplace disputes, however, is rarely the best means of dispute resolution. The adversarial system is expensive, disruptive and protracted. More significantly, by its very nature, it tends to drive the parties further apart weakening their relationship, often irreparably. Tragically, far too frequently the process completely ignores the real underlying problem. As a result, by the very nature of the adversary process, minor disagreements and the stress inherent in the employment relationship escalate into a full scale war, typically resulting in the termination of the employment relationship, years of litigation and tens of thousands of dollars in legal expense for both the employer and employee.
Furthermore, in the recent past several factors have contributed to a marked increase in both the frequency and intensity of litigation between employer and employee. These include:
- Enactment of legislation providing employees with additional workplace rights.
- The erosion of the traditional employment-at-will rule which for most of our industrial history precluded employees from suing their employers.
- Recognition of new legal theories permitting employees to sue their employers and supervisors.
- The continuing diversification of the American workplace with respect to the attributes of its workers, their lifestyle choices and their core beliefs.
- Increased use of jury trials in employment litigation.
- Larger damage awards.
The result is that the contemporary employer is charged with an impossible task – to successfully manage its human resources in an increasingly competitive environment, while keeping legal claims from arising and, when they do, in responding to them with minimum cost and disruption.
A Solution – ADR
Some Concepts and Definitions
Alternate dispute resolution (ADR) is simply use of a means to resolve disputes other than the traditional court and administrative forums. A nebulous and ever expanding concept, ADR encompasses a broad spectrum of activities ranging from a simple open door policy through binding arbitration of statutory claims. Intermediate ADR possibilities include an internal grievance procedure, mediation, ombudsman and peer review. A synopsis of some of the terms follows.
Informal company dispute resolution policies, such as open door policies are just statements of policies and procedures whereby employees are encouraged to discuss their concerns with higher level management, usually with some assurance against reprisal or adverse action.
- Formal internal grievance procedures are company policies which establish procedures for challenging specified aspects of employment with a specified appeals procedure to higher levels within the organization that provide an established channel of dispute resolution to formally air employee grievances and provide adjudication of them.
- Mediation is an informal process whereby a third party neutral meets jointly with the disputants in efforts to assist them in finding common grounds upon which to resolve their claims.
- Fact finding is a more formal process where third party neutral receives formal submissions of evidence and possibly conducts a hearing on a dispute after each side presents its case, and renders a non-binding recommended decision.
- Arbitration is a more formal process under which the parties consent to present their dispute to a third party neutral who hears evidence and arguments usually in a formal hearing setting and then renders a decision which legally binds the disputants.
- Peer review consists of submitting a dispute or issue to a panel of peers of the disputants (or sometimes only the employee) for formal assessment and evaluation, sometimes with binding determination.
In addition, various hybrid and innovative dispute resolution techniques are being increasingly used. These include grievance, mediation or mediation/arbitration. Furthermore, standard and innovative ADR mechanisms are applied as an independent stage or step in conjunction with traditional litigation. Many courts, for example, require some form of mediation or third party case analysis as a standard stage in the processing of litigation.
In my view, a carefully structured ADR policy would typically use different types of ADR at different stages of the dispute. For example, ADR policy may have the following progressive steps: an employee may first be required to informally discuss a concern with a supervisor, then file a written grievance with higher management, submit the dispute to mediation and, if necessary, then finally proceed to binding arbitration.
Where ADR is effective and resolves the dispute, it is far less costly and time consuming than court litigation. More importantly, a carefully instituted and well-planned ADR mechanism should result in a better resolution of the underlying dispute than traditional litigation. Thus, because mediation focuses the parties to concentrate both on the other side’s perspective, as well as their own and in structuring their own mutually agreeable resolution to their dispute, it is usually far more effective in employment settings than litigation. This is because litigation imposes a third party’s finding as to the relative claims of the dispute upon the parties. As often as not, the result is an appeal of initiation or scheme to secure revenge. The parties to a mediated settlement, in contrast, have invested time and effort into reaching their mutually accepted resolution to the dispute. They are, therefore, by the very nature of the process, committed to its success. Finally, a skillful mediator can assist each disputant with appreciating the concerns and positions of the other party. This reduces the tension between them, enhances empathy and can lead to innovative solutions.
Originally, courts were very suspect of ADR procedures. Indeed, early decisions held agreements to arbitrate void as usurping the function of the court. As court dockets increased, however, courts began searching for ways to reduce and better manage their case load. As a result, the perception of ADR as undermining public policy quickly dissipated. Legislation has been enacted at the federal and state levels authorizing various forms of ADR. Recent case law has firmly established that agreements to arbitrate employment claims, including EEO complaints and law claims, are generally valid and enforceable. Some proponents, as well as the EEOC and NLRB, however, have taken the position that such agreements are illegal because they improperly interfere with exercise of statutory rights. If contemporary trends continue as I fully expect they will, the administrative agencies’ objections to such agreements are likely to lose out in favor of the desirability to use binding ADR as an alternative to administrative proceedings. The views will be rejected in favor of encouraging use of ADR. To be upheld against such a challenge, any ADR system must be fair, neutral and in no way curtail the substantive rights accorded employees by law, such as the right to be free from discrimination or to engage in protected, concerted activity.
Use of ADR provides several immediate advantages to employers. First, the costs of resolution of disputes, as well as the length of time until final conclusion, are substantially reduced when ADR is used. A vigorously contested employment discrimination suit can quickly cost up to $100,000.00 in attorneys’ fees to defend. Attorneys’ fees for arbitration can typically be completed at a total cost of less than $20,000.00. It usually takes 2 to 3 years before a civil lawsuit reaches trial and even then, the possibility of appeal could result in several more years of litigation before the matter is finally concluded. Mediation can usually be held within 60 days of the time the parties agree to use it and it typically takes a day or two to complete. An arbitration award is usually issued within 9 months of the time an arbitrator is selected.
ADR often results in better resolution of employment disputes. Where mediation is successful, for example, the parties are committed to the negotiated resolution of their dispute. Where the employment relationship continues, a “new beginning” is far more likely than with any adjudicated settlement. Unlike civil litigation which can result in layers of appeals following a jury trial, arbitration is final and binding. In arbitration and mediation, since the parties participate in the selection of the neutral, they can select a neutral familiar with their industry and acceptable to both parties. In court, in contrast, randomly assigned judges who cannot be removed may have little experience with employment disputes or the industrial setting involved. Under current law, a comprehensive ADR policy which requires arbitration of all employment-related disputes can legally bind an employee to arbitrate discrimination and most other workplace claims instead of taking them to court. This reduces the likelihood of a jury trial and could ultimately save the employer substantial amounts in damage awards. In 1991, the Supreme Court decided the case of Gilmer v. Interstate /Johnson Lane Corp. , 500 U.S. 20 (1991). There the court held that the employment application Mr. Gilmer signed bound him to the rules of the National Association of Security Dealers which in turn required arbitration of all disputes arising out of his employment, he was required to arbitrate, not litigate, his age discrimination claims. In several subsequent cases, courts have applied the Gilmer ruling to require employees to arbitrate claims under Title VII and other employment laws. Both the NLRB and the EEOC, however, have taken the position that an agreement to arbitrate claims which waives the right to a jury trial or administrative proceedings, is illegal and void because it is contrary to the public policy underlying these statutes. In addition, legislation has been proposed that would, in effect, permit the employee to choose litigation in court rather than the employer’s ADR procedures. Nonetheless, given the backlog of civil litigation, since the courts are likely to continue to favor and encourage ADR as an alternative to litigation, they are likely to continue to uphold the validity of virtually all agreements to submit employment-related disputes to ADR. Even if the employee’s right to try cases in court is ultimately recognized, the parties will still be permitted to voluntarily elect to submit to ADR. Moreover, mediation which is non-binding and various other types of ADR will continue to be used more frequently as settlement techniques during the course of civil litigation. Indeed, many courts require use of some sort of ADR as a step in the processing of civil litigation, and virtually all courts encourage ADR use on a case-by-case basis.
Disadvantages of ADR
ADR does have some negative aspects. Since arbitration is final and binding, except under very rare circumstances, the parties are bound to comply with the decision rendered no matter how arbitrary or legally incorrect it may be. If a legal decision varies with established legal precedent or is unsupported by the evidence, it can be reversed upon appeal. Furthermore, since arbitrators are selected by the parties, they are sensitive to maintaining positive relationships with the parties. As a result, they tend to decide cases so as to give something to both sides. Arbitrators have a reputation for “splitting the baby,” frequently resulting in returning discharged employees to work with no back pay. A court upholding discipline but reducing the penalty, in contrast, is more likely to decide a dispute on its particular facts and has little incentive to let the litigants’ perceptions of the forum influence the decision. Unlike litigation, mediation and other non-binding ADR methods may not work at all, resulting in expenditure of time and resources to no avail.
Finally, there are cases of pressing legal or economic importance where full-fledged litigation still is the best way to fully resolve a clash of legal rights. Examples include the continuing struggle with the propriety of using affirmative action to remedy discriminatory practices or a subcontracting decision in a union setting that may determine the employer’s future economic viability. In these cases, the importance of the issue warrants use of the full legal process which is best served by full scale advocacy of opposing viewpoints before an experienced and neutral tribunal.
Advocacy And ADR
The skills and resources to effectively advocate in an ADR proceeding are different than those needed to effectively litigate claims. This is because ADR is structured to reach resolution, whereas litigation focuses on total advocacy. Arbitrators, who have a far greater tendency to “split the baby” than courts, are sensitive to different concerns than a judge or jury. In addition, arbitrators’ experience in interpreting and applying the terms of collective bargaining agreements means that they approach the dispute from a different perspective than a court or a jury who tend to concentrate on the facts. This difference in perspective may very well alter the outcome of the dispute. The advocate needs to be sensitive to these perceptions and mold his or her presentation of the facts and arguments as to their client’s rights within this environment. Since rules of evidence are typically relaxed and the proceedings are far more informal in ADR proceedings, the advocate needs to be effective in this less structured environment. For example, yelling, “I object” during the opening presentation of a position in a mediation is not likely to enhance the client’s interest. Unquestionably, negotiation skills are far more valuable in mediation than in trial work.
In 1983, I performed research in ADR under Judge Jack P. Etheridge who was then a professor at Emory University School of Law. Based on my 10 years’ experience in labor management relations prior to attending law school, I immediately recognized the superiority of ADR over civil litigation as a means to resolve workplace disputes. I also participated in the first ADR seminar offered at Emory. My research resulted in publication of the work Mediation of Workplace Disputes: A Prescription for Organizational Health for the Employee Relations Law Journal in 1985. Two years later, I published An Internal System of Corporate Mediation for Employee Relations Today. This study, which was co-authored by Judith Cohen, currently the head of American Mediation Resources, Inc., an Atlanta based mediation provider, explored the successful use of a corporate mediation process to resolve employee and independent contractor disputes in a large, successful corporation.
In 1987, I was certified as an arbitrator for the Fulton County Superior Courts and have served as an arbitrator for this court of general jurisdiction continuously since. In 1995, I was certified as both an arbitrator and mediator by the Georgia Office of Dispute Resolution. In addition, arbitration, mediation and fact finding have been core components of collective bargaining since the passage on the National Labor Relations Act. Unlike other branches of civil litigation which have begun to use ADR only since the early 1990’s labor law has used ADR for generations. Our firm possess unique skills and a very high level of experience as advocates for the parties in all types of ADR in employment settings.
ADR is the dispute resolution mechanism of the future. For workplace disputes, it is better than litigation. Today, it offers employers a far less expensive, less risky, quicker and potentially more effective means of dispute resolution than traditional litigation. It can improve organizational health by identifying and addressing the root cause of employment disputes and structuring creative resolutions. I unreservedly endorse its use in virtually every organization. It should also be considered in virtually any litigation as an alternative to adjudication or, at the minimum, a step in the process.
As with all policies and core values, the particular form of ADR an organization elects to employ, as well as the policies implementing it, should be carefully structured to enhance your particular operations, your employee relations philosophy, your core values and your past experience in adjudication of employment disputes. The variety and flexibility of ADR enhances its potential for effectiveness. We would be delighted to work with you in structuring a particular policy and developing the proceedings that will work best in your organization, or to represent you in any particular ADR proceeding. In addition, Adam J. Conti is available to serve as a mediator or arbitrator in any particular employment dispute.
Please contact us to discuss your particular situation or for further information.