They Might Die Before They Hit the Floor


That is how one noted lawyer described what would happen if HR and Risk Management people could hear courthouse conversations amongst plaintiff lawyers. Unless your company is bankrupt or has never in its history had a disgruntled employee, you likely will, sooner or later, be in the crosshairs of a plaintiff’s attorney looking for an easy mark in an employment base. And then, if the action that is eventually brought turns out to be a class action, you can multiply that risk by a factor of hundreds or even thousands, as Wal-Mart and others have learned.


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, lawyers are trained to advocate totally for their client’s victory. Defenses are concocted to minimize the impact of any weakness in their side’s case. The opposing side is attacked and demeaned at every opportunity. The bedrock principal underlying the adversarial means of dispute resolution is that if both parties were to advocate totally their respective claims of their clients, the most just resolution of the dispute would obtain. Of course, this is a fiction.


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. Far too often the process completely ignores the real underlying problem. As a result, by the very nature of the adversarial process, the 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, tens of thousands of dollars in legal expenses, and only the lawyers profit.


In the recent past, several external factors have combined to result in 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 that, 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.
  • Increase use of jury trials in employment litigation.
  • Larger demand awards.
  • Class action cases.


When these factors are combined with the systemic escalation of disputes resulting from our legal system’s use of an adversarial system of dispute resolution, 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, responding to them with minimal cost and disruption


A Solution – ADR


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, ombudsman, executive and peer review, and mediation.


A carefully structured ADR policy would typically use different types of ADR at different stages of the dispute. For example, an 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 final 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 becomes a very effective risk management/loss control tool. Because mediation focuses the parties to concentrate both on the other side’s perspective as well as their own, and to structure 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 findings as to the relative claims of the dispute upon the parties. As often as not, the result is an appeal or initiation of a 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.


Basically, the well-crafted ADR program will require non-binding mediation before mandatory binding arbitration. A well-crafted ADR program should cover all claims of an employee except workers’ compensation and unemployment compensation. That includes wage-and-hour claims as well and this can be particularly important in a prospective wage-and-hour class or collective action.


The ADR program must be balanced. An employer will not be able to shift the balance in its favor by use of an ADR procedure that is unfair to employees and does not preserve all legal rights and remedies of an employee, and preserve due process. Courts would have little trouble invalidating any program which purports to limit the statutory remedy of an employee, including any remedies for punitive damages, legal fees, or any other remedy under which the claim brought would allow. Courts will not validate an ADR program which artificially limits the statute of limitations, allows the employer to unilaterally change the arbitration rules, or allows the employer to choose the arbitrator.


There are significant risk management advantages to a well-crafted ADR program.  Those advantages include reduction in cost as compared to conventional litigation, both in terms of legal fees and expenses, and time required by the employer and its managers involved in protracted judicial litigation. Arbitration proceedings are non-public which means that publicly sensitive businesses would not have their dirty laundry aired in public. One significant advantage is the certainty that management and employees have in the process. Everyone understands what the rules are and manage their expectations accordingly. This result can improve employee relations and reduce turnover. Another important factor is that when an arbitration ruling is made the award will be final and binding on the parties. This allows the parties to achieve finality and can get on with their lives. One of the most important aspects of a carefully crafted ADR program is the prospect of eliminating or significantly reducing class or collective actions. Also, exposure to frivolous lawsuit will be significantly curtailed. Implementation of an ADR program requires some careful planning but when executed properly can be relatively painless process to the organization irrespective of its size.


ADR is the dispute resolution risk management mechanism of the future. For workplace disputes, it is far superior to conventional litigation. It offers employers a far less expensive, less risky, quicker, and potentially more effective means of dispute resolution than does traditional litigation. It can improve organizational health by identifying and addressing the root cause of employment disputes and structuring creative resolution.


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 adjudicating employment disputes. The variety and flexibility of ADR enhances its potential for effectiveness. 

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About this Entry

This page contains a single entry by Whayne M. Hougland published on March 1, 2011 10:17 AM.

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