Manual for the Use of Alternative Dispute Resolution Techniques in Employment Disputes
COLORADO BAR ASSOCIATION'S
ALTERNATIVE DISPUTE RESOLUTION FORUM COMMITTEE'S
MANUAL FOR THE USE OF
ALTERNATIVE DISPUTE RESOLUTION
TECHNIQUES IN EMPLOYMENT DISPUTES
Prepared By The Committee's Employment Disputes Study Group
The Employment Study Group of the Alternative Dispute Resolution Forum Committee of the Colorado Bar Association drafted this manual, regarding the use of various alternative dispute resolution techniques, such as mediation, arbitration and peer review, for employment disputes. The group contained executives from alternative dispute resolution providers, attorneys who represent employers and employees and professional arbitrators and mediators, all of whom have particular experience in employment disputes. The manual provides the reader with an overview of various issues for consideration in the employment dispute context.
Drafting employment agreements and designing internal policies to handle employee disputes are activities that require independent legal advice. The law in regard to the use of arbitration and other alternative dispute resolution (ADR) techniques within the context of employer-employee relations and agreements is ever changing. This manual is intended to provide suggestions for consideration and to educate the reader about the possibilities for ADR use in the employment context. It is not intended to provide legal advice or to replace the very necessary role of knowledgeable employment counsel in assessing each unique situation.
PRIOR TO FORMAL MEDIATION OR ARBITRATION.
If there is one message that employers should heed, it would be to do all they can to resolve work place disputes as early as possible. There are few, if any, employers who would argue against staying out of court. Legal fees, hard feelings and the unpredictability of the outcome make litigation a risky business for everyone involved.
Alternative dispute resolution (ADR) is a generic term that describes various methods of resolving work place conflicts rather than going to court. ADR covers an extensive range of problem-solving processes that resolve conflicts more quickly and less expensively. The potential advantages of ADR are numerous:
- Reduction of attorneys fees and related costs of dispute settlement;
- Rapid resolution of a dispute that minimizes lost employee hours and productivity resulting from unresolved tensions and open conflicts;
- Early intervention and possible resolution of disputes that promotes a true reconciliation of various interests and needs of parties;
- Relationships may be salvaged which would otherwise be fractured or destroyed forever in litigation;
- There are no winners or losers as in an adversarial process. The ADR process fosters cooperative problem-resolution that encourages the preservation of working relationships;
- ADR provides the "opportunity to be heard" to disputants in a home-grown, low-cost, less rigid system.
Although mediation and arbitration are the two most commonly known forms of ADR, there are other approaches to early dispute resolution that employers may wish to consider.
Peer review processes allow co-workers to hear information relating to a work place dispute and to make recommendations or decisions about appropriate resolutions. The advantages of this process is that it is an internal mechanism, it tends to foster solutions that fit the needs of the work place, and employees with grievances tend to view it as a "fair" process. The employees with grievances tend to perceive that they have had the opportunity to be heard in a fair forum.
An Ombudsman is a trained employee whose job duties include uncomplicated dispute resolution. An Ombudsman is accessible to attend to conflicts between co-workers, or workers and supervisors in a fairly immediate fashion. Fact-finding tends to be minimized, the focus being on resolution rather than on establishing fault.
Processes can be blended to achieve one that best serves the needs of the individuals involved and the organization as a whole. However constructed, these processes will have several common characteristics:
- They are more "fluid" and "flexible" than formal;
- They provide a grievant an opportunity to be heard in a manner that permits dignity and in a forum that suggests that fairness will pervail;
- Both the process and third-party mediator/facilitator are appropriate to the nature and severity of the dispute;
- The process occurs before feelings harden, memories fade and co-workers line up on either side;
- ADR looks at alternative solutions that may fall outside the consideration of how much is my claim worth? It may also explore core issues and the parties ultimate goals;
- Issues surfaced that reflect areas of common concern to workers or managers are identified and brought to the attention of appropriate management;
- The facilitated process used is responsive to the existing corporate culture for problem-solving and enhances those current mechanisms.
Mediation is a consensual process that can be structured in whatever manner the parties agree on. The skills of mediators vary widely. There are programs in Colorado that provide training for mediators in the process skills and rules of the mediation process. Standards of conduct for a mediator have been developed. There is, however, no formal certification program for mediators.
Selection of the right mediator for the situation is very important. Choosing the right mediator to serve as a neutral third-party is different than choosing an advocate or attorney. The mediator should be the mutual choice of both parties. Interview the mediator to determine style, approach, methods, and chemistry.
In general, the neutral third-party, whether a mediator, an "ombudsman", a "peer review" panel, a trained facilitator, or a fact finder share similar attributes:
- They are formally trained in problem-solving;
- The third-party may have a background or expertise satisfactory to the parties in the dispute;
- They are able to gain the trust and confidence of both parties to the dispute through an appearance of competence and neutrality;
- They are sensitive to issues such as inequality of power and allegations of abuse of power.
- They are vested with the authority by management to achieve a resolution and to commit this resolution to a written and enforceable agreement;
How can early mediation or facilitation techniques be effective? To achieve a satisfactory result through mediation you must plan carefully. A few suggestions:
- Involve the third party as early as practicable;
- Determine with the assistance of the mediator whether the dispute is one that is appropriate for the mediation process. Certain issues and claims will not be;
- Depending on the severity of the dispute, consider using objective and impartial current personnel if well-trained in problem-solving, and in the subject matter;
- At the outset, obtain commitments, whether verbal or written, from the disputants that they will negotiate settlement in good faith.
As a purely consensual process, mediation does not bind the parties unless the parties specifically agree. They may want to include language to the effect that they intend to be bound by any settlement or partial settlement reached as the final resolution of their dispute.
A strongly-worded confidentiality agreement before participating in the mediation will minimize, but not eliminate, the risks of improper use of information.
There is some controversy regarding the propriety of mediation in certain disputes or claims, for example, allegations of civil rights violations such as unlawful discrimination, and sexual harassment, etc. Mediation may be useful in framing or in resolving certain issues while preserving a party's right to exercise his/her statutory prerogatives.
The parties may agree to mediate and/or arbitrate all disputes arising under a particular contract. Since mediation and arbitration are basically creatures of contract law, in the absence of overreaching arising from unequal bargaining power or, arising from other legal limitations, the parties are generally free to craft whatever provisions they deem desirable.1
Arbitration is a structured and more formalized "trial" process before an agreed-upon neutral arbitrator or panel of arbitrators. Unlike mediators, arbitrators render decisions in matters before them much like the courts. The parties agree to be bound by the decision of the arbitrator, and with very limited exception, these decisions are final and binding on the parties. Arbitration provisions in contracts may address any or all of the following issues.
- The arbitrator's selection and locale.
- The number and qualifications of arbitrators.
- Identification of remedies.
Whether and to what extent the proceedings and award are confidential.
- The possible bifurcation of liability and damages.
- The substance and timing of the arbitrator's award.
- The limitations, if any, on the arbitrator's authority.
Exceptions to arbitration allowing the parties to seek judicial injunctive relief pending arbitration.
- Who pays fees and expenses, including attorneys fees.
- The substance and timing of the arbitrator's award.
- The governing law.
- Any exceptions to the normal finality allowing an appeal.
Identification of a standard to determine whether the employer's conduct was proper and legal.
Because of the complex nature of arbitration and the various laws impacting this process, it is not practical to include specific rules and procedures in this manual. Subject to the provisions of applicable law, the parties are free to draft procedures to meet their specific needs. In the absence of specific provisions covering these subjects, the parties may also incorporate by reference established rules or statutes, for example, the [insert ADR rules]2, the Uniform Arbitration Act, the Federal Arbitration Act, or the Administrative Dispute Resolution Act.
The parties may agree to require mediation before submitting any disputes to arbitration. Sample language requiring some form of mediation follows.
All disputes shall be mediated before the dispute is submitted to arbitration. The parties shall first attempt to settle the matter through negotiation. If negotiation fails, the parties agree to submit the dispute for mediation administered by the [insert ADR provider] under its Commercial Mediation Rules. The mediator shall certify that the dispute has been mediated in good faith before the matter may be arbitrated.
The parties agree to attempt to settle by negotiation all disputes. If it cannot be settled through negotiation, the parties agree to try in good faith to settle the dispute by submitting it to an impartial mediator before resorting to arbitration, litigation, or other dispute resolution procedure.
Before submitting a dispute to mediation, the parties should consider provisions dealing with the qualifications of the mediator, whether and in what circumstances the mediation is confidential, payment of fees and expenses, locale of the meetings, or any other issue of concern to the parties. For example:
- To encourage free and open discussion between the parties, the mediation process and all statements made by the parties during mediation shall be strictly confidential and shall not be admissible in any subsequent proceeding, except as provided by the Administrative Dispute Resolution Act, Pub. L. No. 101-552.
- The mediation shall be held in a mutually agreeable place in Denver, Colorado.
- The parties shall share equally the fees of the mediator and costs of the mediation proceeding, each party shall be responsible for its own attorneys fees and costs.
The parties can agree to settle a dispute after it arises through a process sometimes referred to as Med-Arb. For example:
All monetary disputes arising under this agreement shall first be submitted to mediation administered by the [insert ADR rules] under its Commercial Mediation Rules and, if the parties are unable to agree on a settlement amount, the dispute shall be submitted to a neutral person under [insert ADR rules], and shall select between their final negotiated positions, that selection being binding on the parties.
Different forms of Med-Arb can be created by the parties. For example, the parties may agree to first submit the dispute to mediation then arbitrate the case de novo through a process known as last and best offer. Frequently used in baseball salary arbitrations, the parties submit their final and best offers to the arbitrator, who is required to select one offer or the other.
MEDIATION RULES AND PROCEDURES
FOR EMPLOYMENT DISPUTES
Note: Most mediation and arbitration proceedings are conducted pursuant to specific rules. The following rules are provided only as examples of mediation rules and parties considering mediation should contact their mediation provider to ascertain the specific rules which may apply to their particular situation.
One or more experienced and specially trained neutral persons, selected by agreement of both parties, conducts a meeting with the parties to help them resolve their differences. The mediator's role is to facilitate communications and suggest methods of resolving the dispute without deciding who is right or wrong and without imposing any settlement on the parties. Mediation is a voluntary process and any settlement must be acceptable to both employer and employee. The selected mediator commits the time necessary to understand the issues involved and to resolve the dispute expeditiously. The goal of mediation is to resolve the dispute voluntarily and mutually in a speedy, cost-effective and private manner.
Inquiry, Proposal or Initiation of Mediation Process
Either the employer, the employee, or other party to the employment dispute, or any of them jointly, may inquire about or initiate the mediation process. If requested by one of the parties, a mediator will call the other party to seek their agreement to participate.
Agreement to Mediate
After mutual agreement to mediate has been reached, all parties shall execute a Submission Agreement supplied by the mediator.
Withdrawal from Mediation
Any party may withdraw from the mediation at any time prior to the signing of a settlement agreement by giving written notice to the mediator and the other parties.
The mediator may withdraw at any time by giving written notice to the parties in the of personal reasons requiring withdrawal, a belief that any party is not participating in
good faith, or a belief that further mediation is not warranted. In the event the
mediator withdraws, the parties may select a successor.
Qualifications of Mediator
The mediator shall be impartial and neutral and shall not serve if that person has any financial or personal interest in the results of the mediation, except after a full disclosure of such interest and an expression of consent of all parties.
The mediator should have skill in the conduct of hearings and dispute resolution, and the parties may also prefer that the mediator possess general knowledge of employment laws and regulations applicable to the dispute, and have some familiarity with work place environments.
Selection of Mediator
A list of impartial mediators shall be furnished to any party expressing an interest in submitting a dispute to mediation. Available dates will be offered and the parties may assist in designing or selecting the process best suited to their needs. The parties may from such list select the mediator by mutual agreement, select such other mediator acceptable to the parties, or agree to allow a neutral party to develop and implement a procedure for such selection.
Date, Time, and Place of Mediation
The mediator may conduct pre-mediation meetings with the parties and/or their representatives separately or jointly, in person or by telephone.
The mediator will schedule the mediation sessions in consultation with the parties and/or their representatives.
Attendance and Right to Representation
All parties and decision-makers whose consent or authorization will be necessary to achieve a full settlement of the dispute should attend the mediation conference sessions, unless excused in advance by the mediator. In the latter event, they shall be available by telephone. Parties will advise the mediator and other parties at least three business days in advance of a scheduled mediation session of the names of the participants who will be present at the mediation sessions.
Record of Proceeding
No written or other memorialization of the mediation process shall take place, other than the personal notes of the mediator or the parties and the settlement document which memorializes the agreement of the parties.
Exchange of Information
In advance of the conference and if requested, the mediator will assist the parties in scheduling the voluntary exchange of information needed for effective participation in the mediation.
Confidentiality and Privilege
During the Mediation Process:
The mediator is required to maintain strict confidentiality regarding all aspects of the mediation unless the party entitled to claim the privilege waives such confidentiality.
The mediation process is confidential and private. The parties may agree to rules that would allow the parties to honor their interest in the degree of confidentiality and privacy that are desired to maximize the opportunity for settlement of the dispute.
During the mediation, a party may disclose information pertaining to the settlement discussion to any person whose advice the party desires in order to effectuate a resolution of the dispute. A party may also disclose to any person that mediation is taking place.
Subpoenas and Admissibility of Evidence Produced during Mediation
Any written or oral statement, conduct, admission, or settlement offer made in the course of the proceedings by any of the parties, their agents, employees, experts, witnesses and attorneys shall be inadmissible as evidence in any forum. The mediation conference shall be treated as privileged and protected under Rule 408 of the Federal Rules of Evidence and all state counterparts.
Evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable solely as a result of its presentation or use during the mediation.
If necessary and appropriate, the parties may alter the rules with respect to confidentiality if such would in the judgment of the parties promote resolution of the dispute and if the integrity of the process is otherwise protected.
The terms of a settlement arrived at as a part of a mediation may be disclosed in a proceeding to enforce the settlement.
At least 10 days prior to the first mediation session or within such time set by the mediator, the parties shall deliver to the mediator a confidential memorandum setting forth the nature of the dispute and a description of previous settlement negotiations and the present settlement status, together with additional information which they believe will assist the mediator in nderstanding the dispute. If the parties cite case law or statutes in their submittal, a complete copy of same should be included. At the conclusion of the mediation, the mediator will return all materials to the respective providing party, if requested.
For clarification purposes only, the mediator may request any party at any stage of the proceeding to submit clarification and additional information, including the employee's personnel files, employee handbooks, employer policy and procedures, and any other relevant documents relating to the dispute. The mediator may also request the opportunity to interview in the presence of the participants the employee's supervisor or other employees having relevant information.
The mediator may suggest to the parties the employment of an independent expert, but will retain such expert only with the mutual agreement and at the expense of the parties.
Method of Mediation
Unless otherwise specified by agreement of the parties, the mediator may promote settlement in any way deemed most likely to be effective. The mediator does not have the authority to impose a settlement on the parties. However, the objective of the mediation is to reach a binding agreement between the parties.
Agreement to Procedure
At the time the matter is submitted to mediation and by signing the Submission Agreement, all parties shall expressly agree to these procedures and any specific modifications agreed to by the parties and approved by the mediator.
Expedited Nature of Mediation
The mediation shall be expedited and all parties and representatives will make themselves reasonably available for mediation sessions.
Duration of Mediation
Efforts to settle the dispute shall continue until a written settlement agreement is reached, or until the mediator concludes that further mediation is not likely to be successful, or one of the parties withdraws from the process by serving notice on the mediator and the other parties.
Fees and Expenses
Mediation is conducted pursuant to agreement, and the parties and the mediator may make any mutually agreeable arrangement with regard to payment of the mediator's fees and costs.
If a settlement is reached, the parties shall prepare and sign a settlement agreement or a memorandum of understanding. The mediator may take part in the actual drafting and negotiation of the settlement agreement if requested by either party or if, in the mediator's judgment, such participation is necessary to effectuate a binding settlement.
Standards of Professionalism and Conduct
Mediators shall govern themselves in conformity with the standards of conduct of their profession. Attorney representatives shall abide by the local standards of professionalism.
The Alternative Dispute Resolution Forum Committee wishes to thank the members of the employment disputes study group for their efforts in the development of this manual. In particular, we wish to thank Cindy Castellano, Berwyn Davies, Van Elmore, Lynn Feiger, Breckenridge Grover, Fritz Ihrig, Valerie McNaughton, Preston Oade, John Robinson, Barry Roseman, Mike Severns, Stephen Snyder, Sheila Somberg, Robert Steiert, Dominic Verrastro and Tim Sparks for their specific contributions.
1The law concerning the enforceablility of mandatory arbitration provisions in pre-dispute employment agreements is somewhat open and changing. The Colorado Bar Association takes no position on this issue. Consultation with knowledgeable employment counsel is recommended.
2Organizations with dispute resolution rules include, among others, the American Arbitration Association, the Center for Dispute Resolution, Judicial Resolutions, Inc., and Judicial Arbiter Group, Inc.