“CHOICE, CONTROL, AND CONCLUSION”

 

The 3 C’s of Arbitration & Mediation of Employment Disputes

 

By:  Charles P. Bauer, Esquire

Ransmeier & Spellman Professional Corporation

One Capitol Street

P.O. Box 600

Concord NH  03302-0600

Tel. # (603) 228-0477

Fax # (603) 224-2780

e-mail:  charlie@ranspell.com

I.            Introduction

            Employment disputes are fraught with emotion, expense, and uncertainty for employees and employers. Disputes can be resolved by litigation, wherein decision-making authority is abdicated by the employee and employer to relatively disinterested third parties - judge, jury, or appeals court.  Whereas, arbitration and mediation of employment disputes allow the employee and employer to retain certain levels of choice, control, and conclusion over the emotion, expense, and uncertainty features of employment disputes.  As a general principle, parties to employment disputes should consider resolution first through mediation; then arbitration; and as the option of last resort, litigation.

 

II.            Arbitration or Mediation vs. Litigation[1]

Arbitration is an agreed-upon procedure, administered by an independent arbitrator (often chosen by the parties) who hears arguments and evidence, and decides the outcome of the employment dispute. Mediation is also an agreed-upon process, managed by an independent mediator (chosen by the parties), who facilitates the employer and employee to reach their own resolution of the dispute by agreement. Both forms of alternative dispute resolution (ADR) are less expensive and less time-consuming than litigation; have simpler procedural and substantive rules than litigation; are less hostile and emotionally charged than litigation; and are more flexible in scheduling than litigation.  The key difference between arbitration and mediation is that in mediation, the parties retain the decision-making power to reach their own resolution, oftentimes utilizing remedies and relief that are not available to the parties in litigation or arbitration; whereas in arbitration, the outcome of the dispute is decided by a third party. 

 

Employment disputes filed in federal and state courts in New Hampshire are ordinarily subjected to the Alternative Dispute Resolution (“ADR”) programs.  In federal court, the Federal Dispute Resolution Act of 1998 mandated all federal courts to adopt ADR programs.  ADR in federal court usually consists of mediation or summary jury trial.  Likewise, employment disputes in state court are oftentimes subjected to the Superior Court Rule 170 ADR program, which consists of mediation, neutral evaluation, or arbitration.  Even in administrative proceedings, employment disputes filed at the New Hampshire Human Rights Commission and/or Equal Employment Opportunity Commission are subject to ADR proceedings that consist of “conciliation” sessions or outright mediation sessions. 

 

            Parties and counsel in employment disputes (pre-litigation or pending litigation) can always agree to submit an employment dispute to private mediation or private arbitration by mutual agreement. 

 

III.             Methods of Employment Mediation

There are three general types of mediation:  facilitative; evaluative; and transformative.

 

The facilitative method of mediation is one in which the mediator does not make recommendations to the parties or give his/her own advice or opinions as to what a court may or may not do with a particular issue or matter.  The facilitative approach permits the mediator to assist the parties in reaching an agreeable solution by asking questions, validating points of view, searching out interests, and assisting the parties in finding and analyzing their own options and solutions.  Ordinarily, the facilitative mediation is used where a mediator has no substantive expertise concerning the area of the dispute.

 

            The evaluative approach to mediation is one in which the mediator offers his/her opinions and advice about the problems, evidence, and likely outcome of the matter before a judge or jury, and may suggest reasonable settlement terms to assist the parties in reaching resolution.  In the evaluative mediation, the mediator oftentimes points out weaknesses in the case during private sessions, and evaluates what a judge or jury is likely to do, and makes formal or informal recommendations during the process of mediation.  Mediators must have experience and knowledge, of course, and have the confidence of the parties, to be effective in evaluative mediation. Most mediators employ the evaluative type mediation when the parties no longer have a continuing employment relationship. 

 

            In transformative mediation, the emphasis is on improving communication and transferring information so that the parties may transform their relationships as a result of mediation.  In employment disputes, the transformative approach of mediation is often useful if there is an on-going employment relationship between the parties. 

 

            When parties, counsel, and employment disputes warrant sophisticated methods of mediation, mediators may use a combination of these styles to assist the parties in reaching resolution.

 

IV.              General Considerations for Employment Mediations

To increase the likelihood of efficient resolution, a mediator who has substantive knowledge of the subject matter should be considered.  Selection of an appropriate and trained mediator is particularly important when the parties’ personalities and other characteristics involved in the dispute are considered.  For example, an emotionally charged plaintiff may require an especially compassionate mediator; whereas, a tough-minded corporate defendant may require a mediator who has had prior business experience representing and defending employment matters.

 

            Location of the mediation is an important consideration.  Selecting a neutral location is oftentimes best, but in some instances, special considerations must be given to the delicate balance between the plaintiff and defendant. 

 

Timing of the mediation is important.  Sufficient facts must be identified and developed, but significant expenses must be taken into consideration.  Whether to mediate before, during, or after depositions, independent medical examinations, or expert disclosures are all issues that need to be carefully considered. 

 

Clients should be prepared for mediation.  The process of negotiation, compromise, and bargaining should be discussed and explained to the client prior to the mediation session. 

 

All individuals who have a significant impact on the decision-making process should be at the mediation, or at the very least, be readily available by videoconference, telephone, or e-mail.

 

            Be aware of tax implications of employment resolutions.  Be clear on all settlement issues.  Discuss and understand all “boiler plate” terms and conditions of settlement agreements, including tax language, indemnification language, non-admission language, confidentiality language, and dispute-resolution language.

 

            Careful consideration should be given to non-economic items as part of the settlement of employment disputes which oftentimes are not available through litigation, such as letters of recommendation; handling personnel files; designating a spokesperson for references or inquiries; non-compete language; no re-apply language; joint press release language; money paid over time; outplacement services; sensitivity training; regret or apology language; charitable contributions; structured settlement or annuities; and scholarships or trusts, and others.

 

If an impasse occurs at the end of the mediation, serious consideration should be given to continued mediation after more discovery; a mediator’s proposal; or an agreement to arbitrate.

 

V.                 Advanced Mediation Techniques for Employment Disputes

 

ADR resolution involves preparation, thought, courtesy, decency, respect, and reasoned exchange of information.  "Rambo" tactics, "scorch the earth" advocacy, cut-throat techniques, and "slash and burn" conduct rarely produce resolution through the ADR process.

                                                                       

1.                  Be patient and creative.  Think of options - economic and non-economic factors.

2.                  Select the right mediator for the case and parties.

3.                  Consider a pre-mediation telephone conference with the mediator to give the “lay

of the land”.

 

4.                  Understand/appreciate the decision-makers in both rooms – what motivates them.
Stand in the other side’s shoes, and consider: what/how much are they going to

offer to resolve this case, and why won’t they go any further/higher?

5.                  Have the lienholders and decisionmakers lined up and ready to go.

6.                  Bring new information during the joint mediation session on liability and/or damages.

7.                  Bring all persuasive documents and “hard evidence” to the mediation session.

8.                  Have the client talk to opposing counsel in the joint session, and to the mediator in private session.

9.                  Work during the “waiting session” – be patient and creative; come up with alternatives and options; be flexible and open to ideas.

10.              Signal to the mediator or tell the mediator: “I need assistance with my client”;

“I need assistance with the other lawyer”; “I need assistance with the opposing

party.”

 

11.              Give the mediator new information each private session – give the mediator something to work with, not just a revised demand or offer.

12.              During each round of negotiation, send a demand or offer with a rationale.

13.              Expect and anticipate “ups and downs” during the negotiating process.

14.              Be prepared to sign a binding settlement document.

15.              Set aside sufficient time for the negotiation “dance”.

 

VI.              How to Conduct a Successful Employment Mediation

 

                        Seven (7)Deadly Errors in Employment Mediation

 

            A.            Wrong people in the process - wrong lawyer, wrong arbitrator/mediator;

            B.            Wrong time to arbitrate/mediate - too early, too late;

            C.            Failure to prepare - don't omit preparation, strategy, and techniques;

            D.            Failure to listen and learn during arbitration/mediation process - re-evaluate strengths and weaknesses;

            E.            Failure to consider non-economic factors and emotional issues;

            F.            Failure to exhibit important qualities during arbitration/mediation - patience, perseverance; and

            G.            Failure to be courteous, respectful, and decent.

           

                        Selection of the Employment Mediator

 

A.         Consider the personalities of the parties, counsel, and the mediator.

B.         Consider the substantive and procedural knowledge of the mediator.

            C.         Consider the respect, confidence, and trust levels of the mediator, parties, and counsel.

 

                        Who Should Participate in the Employment Mediation

           

            A.         Lead counsel

B.                 Parties & spouse/family decision

C.                Witnesses – lay or expert

D.                 Corporate decision-makers - “turf-wars”

E.                  Other players – i.e., annuity specialist

                      

                        When to Mediate Employment Disputes

 

            A.            After sufficient facts and law are identified, but before significant costs are incurred

            B.            Before or after depositions, IMEs, motions

            C.            Attorneys' fees and costs

 

                        Preparation of Counsel and Clients for Employment Mediation 

 

            A.            Understand the process, and the role of each person in the process

            B.            Anticipate sensitive issues

            C.            Anticipate unrealistic negotiating positions

            D.            Understand the background of the mediator and adverse parties

            E.            Patience, flexibility, open-mindedness, and listening

            F.            Polite and constructive approach

G.                Prepare authority issues

 

                        Employment Mediation Written Submission

 

            A.            Concise statements of issues, facts, law, and positions

            B.            Develop a strategy - what to include; what not to include; tone it down; provide copies of articles, deposition parts, expert reports (keep some information in your pocket for later)

            C.            Outline negotiation process (at least in your own mind)

D.                Acknowledge strengths and weaknesses (?)

E.                 Confidential submission - preview special problems or strengths in confidence; alert the mediator of need for help

 

 

 

                        Parties' and Lawyers' Roles at Employment Mediation

 

            A.            Different persuasion and negotiating skills than trial

            B.            Rare opportunity to communicate directly with other party

            C.            Emphasize good faith and good will

            D.            Be open-minded and realistic

            E.            Be firm but diplomatic

 

                        Opening Statement in Joint Session of Employment Mediation

 

            A.            Be polite and respectful but not overly familiar

            B.            Show that you have prepared the case for resolution, prepared the case for trial, and thoroughly, objectively, and professionally evaluated the case

            C.            Emphasize your good faith and your willingness to listen

            D.            Acknowledge belief that resolution will be in everyone's best interest

            E.            If strong feelings or emotions are present, acknowledge those feelings and emotions, and that it is not your intent to embarrass, humiliate, or inflame the other side

            F.            Outline your position to the other side, the basis for your position, and that you have a good faith disagreement on certain issues

            G.            Close by emphasizing your willingness to work through problems, and your hope that with effort and patience, both sides will reach an agreement

 

                        Some Things Not To Do During Employment Mediation

 

            A.            Don't personalize and don't try your case as if you were in front of your boss or the jury

            B.            Don't antagonize

            C.            Don't discuss money in the presence of the other party; communicate all offers through the mediator in separate caucuses

            D.            Don't insult or criticize the mediator or opposing counsel

            E.            Don't make comments calculated to trigger strong emotional responses

            F.            Don't engage in theatrics such as getting up or threatening to leave

            G.            Don't insult and don't create volatile issues

            H.            Don't underestimate the other side

 

           

                        Private and Confidential Caucus Sessions during Employment Mediation 

 

            A.            Be prepared to speak openly and directly

            B.            Be prepared to discuss weaknesses of your case in a confidential setting

            C.            Assess the personality and negotiating skills of opposing side

D.                Look for non-economic as well as economic factors for resolution

E.                 Use the "down time" to analyze and assess your positions

F.                 Prepare for the next several "steps" or rounds of negotiation

G.                Release substantive information in each round

H.                Send "signals" through the mediator

I.                   Build trust and confidence with the mediator

J.                   Use the mediator to help broker a settlement by providing information to the mediator to send to the other side

K.                Try to work through impasses - don't be counter-productive or an impediment

L.                 Send clear offers and messages with the mediator - know "how to dance"; every competently prepared offer carries a message to competent negotiators

M.               To overcome impasses, ask "why" questions

 

 

                        Memorandum of Agreement at Conclusion of Successful Employment Mediation

 

A.                Not the final settlement document, but should clearly outline all essential terms of the agreement

            B.            Should be signed by parties and counsel

            C.            Be clear on terms, timing, and liens

            D.            If no settlement occurs, shake hands, and leave the door open

 

 

 

VII.           Arbitration of Employment Disputes

 

A.                 Introduction

 

Arbitration is favored by many employees and employers who cannot resolve their own employment disputes through mediation. Arbitration is a faster and less expensive way to resolve disputes than litigation. State and federal courts have seen a dramatic rise in the number of employment related lawsuits.  Arbitration is a valuable tool in deciding legal disputes between employers and employees.  Employers are including arbitration requirements in employment contracts, policy manuals and handbooks, and employment application forms.  Court decisions have sustained the enforceability of mandatory arbitration clauses so long as the contract satisfies fundamental contractual requirements including fairness and voluntariness.

 

Arbitration allows parties who have an employment dispute to submit the matter to another person, or panel, who then decides the outcome.  The arbitrator’s decision is final and binding, without an appeal, unless it was procured by correction, fraud, or undue means.  Essentially, there are two types of arbitrations in employment law.  The first is post-dispute agreements, whereby the parties, after recognition of a dispute, agree to arbitrate.  The other type of arbitration is pre-dispute arbitration agreements, which have resulted in extensive legal controversy in the recent past.  A pre-dispute arbitration agreement is agreed upon between the parties before any dispute ever arises, such as in the employment arena, handbook or personnel policy, or employment contract. A pre-dispute arbitration agreement may take the following form:

 

An controversy or claim arising out of or relating to this employment application; employment ADR program; employment contract; or employment, shall be settled by arbitration, administered by the American Arbitration Association under its national rules for the resolution of employment disputes, and judgment upon the award rendered by the arbitrator may be entered in any Court having jurisdiction thereof, unless otherwise agreed upon by the parties.

 

While arbitration is vastly superior to court litigation because it is faster, simpler, cheaper, and confidential, some opponents argue that it is unfair to force employers and employees to arbitrate legal claims that otherwise should be decided by a judge or jury.  Opponents also argue that employees and employers give up certain procedural advantages, as well as potential jury appeal.  Additionally, opponents criticize arbitration and argue that certain issues should receive full public attention and review.  Ironically, courts have been asked to decide the enforceability of arbitration clauses that are designed to keep the parties out of court.

 

B.            Historical Setting of Arbitration of Employment Disputes

 

Historically, employees and labor unions had a deep distrust of judges and the court system, and demanded that collective bargaining agreements contain arbitration clauses to keep employment disputes out of court and away from judges. Employers and management often resisted arbitration clauses because litigation costs and court delays would keep down the number of employment claims, and because many judges had pro-business backgrounds. 

 

In 1925, the Federal Arbitration Act (“FAA”) was passed by Congress in response to the reluctance of state courts to enforce arbitration agreements in business agreements.  A primary purpose of the FAA was to place arbitration agreements on the same legal footing as other business contracts.

 

               In 1929, the New Hampshire legislature passed R.S.A. 542 entitled “Arbitration of Disputes”, which provides that a contract to arbitrate shall have a presumption of validity, irrevocability, and enforceability.  In general, RSA 542 applies to employment-related disputes only when the agreement specifically provides that it will be subject to RSA 542.  Otherwise, the statute does not apply.  The superior court can enforce the arbitrator’s decision; correct or modify the decision based on plain mistake; or vacate the award for fraud, corruption, or misconduct by the parties or the arbitrator, or on the ground that the arbitrator exceeded his/her powers.  The statute of limitations for any appeal of an arbitrator’s decision is one year.

 

C.         Present New Hampshire Statutory & Case Law for Arbitration of Employment
            Disputes

 

NH RSA 542:1 Validity of Arbitration Agreements.
 
A provision in any written contract to settle by arbitration a controversy thereafter arising out of such contract, or an agreement in writing to submit to arbitration any controversy existing at the
time of the agreement to submit, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. The provisions of this
chapter shall not apply to any arbitration agreement between employers and employees, or between employers and associations of employees unless such agreement specifically provides that it shall be subject to the provisions of this chapter.
 
NHRSA 542:2 Stay of Proceedings Brought in Violation of Arbitration Agreements.
  
If any suit or proceeding be brought upon any issue referable to arbitration under such an agreement in writing for arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

 

NHRSA 542:3 Remedy in Case of Default; Jurisdiction; Proceedings.
 
The party aggrieved by the alleged failure, neglect, or refusal of another to perform under such a written agreement for arbitration may petition the superior court for an order directing that such arbitration proceed in the manner provided for in such agreement. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed to the trial thereof. If it is found that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed, otherwise the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.

 

NHRSA 542:3-a Stipulation to Arbitrate.
 
  A stipulation filed prior to trial in any civil case pending in the superior court, in which all of the parties or their attorneys agree to submit the case to arbitration, shall, upon approval of the court, be considered an agreement in writing to submit to arbitration, within the scope of RSA 542:1.  Filing of the stipulation shall stay the trial of the suit until arbitration has been had in accordance with the terms of the stipulation. Arbitration proceedings shall be governed by applicable provisions of this chapter except as otherwise provided in the stipulation. In any case submitted to arbitration under this section, there shall be either one or three arbitrators, whose fees and expenses shall be fixed and paid by the court. However, if the court is of the opinion that the case only warrants one arbitrator, but the parties elect to have three, then the court shall pay the fees and expenses of only one arbitrator, and the parties shall pay the fees and
expenses of the other two, as ordered by the court.

 

NHRSA 542:4 Appointment of Arbitrators.
 
If no method of naming arbitrators be provided, or if for any other reason there shall be a lapse in the naming of arbitrators, then upon the application of either party to the controversy, the court
aforesaid or the court in and for the county in which the arbitration is to be held shall designate and appoint an arbitrator or arbitrators as the case may require, who shall act under the said agreement with the same force and effect as if he or they had been specifically named therein; and, unless otherwise provided in the agreement, the arbitration shall be by a single arbitrator.

 

NHRSA 542:5 Witnesses; Summoning; Compelling Attendance.
 
When more than one arbitrator is agreed to, all the arbitrators shall sit at the hearing of the case unless, by consent in writing, all parties shall agree to proceed with the hearing with a less number. Any person may be summoned as provided in chapter 516, RSA, to attend before the arbitrators as a witness and the fees for such attendance shall be the same as the fees of witnesses in the superior court. If any person or persons so summoned to testify shall refuse or neglect to attend, upon petition, the court in and for the county in which such arbitrators are sitting may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for contempt in the same manner now provided in chapter 516.

 

NHRSA 542:6 Depositions.
 
In any proceeding hereunder, depositions may be taken as provided by chapter 517, RSA.

 

NHRSA 542:7 Award.
 
The award must be in writing and must be signed by the arbitrators or by a majority of those sitting.

 

NHRSA 542:8 Jurisdiction of Court to Confirm, Modify, or Vacate Award.
 
At any time within one year after the award is made any party to the arbitration may apply to the superior court for an order confirming the award, correcting or modifying the award for plain mistake, or vacating the award for fraud, corruption, or misconduct by the parties or by the arbitrators, or on the ground that the arbitrators have exceeded their powers. Where an award is vacated and the time within which the agreement required the award to be made has not expired, the court may in its discretion, direct a rehearing by the arbitrators or by new arbitrators appointed by the court.

 

NHRSA 542:9 Judgment Upon Award.
 
Upon the granting of an order confirming, modifying, or correcting an award, judgment may be entered in conformity therewith in the court wherein the order was granted.
 
NHRSA 542:10 Appeal.
 
An appeal may be taken from an order confirming, modifying, correcting, or vacating an award, or from a judgment entered upon an award as in the case of appeals from the superior to the supreme court.
 

 

 

 

 

 

Recent New Hampshire cases regarding arbitration:

 

 

            D.         Present Federal Law for Arbitration of Employment Disputes

 

The Civil Rights Act of 1964 and 1991 fostered a series of significant federal and state employment discrimination statutes, including the ADA, Title VII, Title IX, ADEA, FMLA, and others.  Additionally, beginning in the 1960’s and 1970s, state courts began to recognize “at-will” wrongful discharge claims, and judicially created theories of employer liability, including implied covenants of good faith and fair dealing, retaliation, public policy violations, and infliction of emotional distress. With the advent of the jury trial permitted by Congress in 1991 for federal claims, including available remedies such as compensatory and punitive damages, large jury verdicts and unfavorable publicity have employers seeking alternatives to employment litigation.

 

            Presently, most collective bargaining agreements contain arbitration clauses because of the quid pro quo:  both labor and management receive faster, more efficient, and binding resolution through arbitration.  Arbitration oftentimes avoids strikes for both management and labor.  When there is an on-going employment relationship, litigation is not often a practical alternative to either employee or employer.   In the non-union private sector, arbitration has only recently been used to resolve employment disputes.  In the private sector, however, in general, employers have come to appreciate individual arbitration agreements; whereas, employees often resist agreements to arbitrate. 

 

Federal Court decisions have upheld enforcing arbitration clauses in contracts to resolve employment disputes.  In 2001, the United States Supreme Court, in Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), acknowledged the benefits of arbitration and held that court access is not a statutory or constitutional right, but simply a forum that can be replaced by arbitration, so long as fairness and due process are afforded to all parties. 

 

 

 

 

 

See also

·        Gilmer v. Interstate/Johnson, 500 U.S. 20 (1991) (agreement to arbitrate Age claim);  

·        Mitsubishi Motors Corp. v. Solar Chrysler, 473 U.S. 614 (1985) (agreement to arbitrate statutory claim is valid); and 

·        Southland Corp. v. Keating, 465 U.S. 1 (1984) (federal arbitration statute preempts state law);

 

            In 2002, the U.S. Supreme Court held, in EEOC v. Waffle House, Inc., 534 U.S. 279, that the EEOC can bring its own suit, despite an arbitration clause between employer and employee.  In Waffle House, an applicant filled out a job application, which included an arbitration clause.  He was hired, but later discharged, and filed a charge with EEOC, based on discrimination.  EEOC brought a suit in its own name against the employer, but the Fourth Circuit held that the arbitration agreement restricted EEOC’s judicial remedies.  The U.S. Supreme Court reversed, and held that the EEOC has an independent statutory authority to sue and obtain remedies on behalf of an employee, without regard to whether the employee agreed to arbitrate.

 

            E.            Employment Dispute Resolution Programs (DRP’s)

 

Notwithstanding Waffle House, many businesses are now implementing arbitration clauses in job applications, personnel manuals, handbooks, and employment agreements.  A properly drafted mandatory arbitration clause in a job application, employment manual or handbook, or employment contract should keep most, if not all, employment disputes out of court. While federal and state laws do not provide any checklist of required provisions for an enforceable arbitration agreement, the following elements are essential:

 

1.      A fair, impartial, and neutral arbitrator – similar to court forum (see Gilmer, 500 U.S.20);

2.      Availability of needed discovery, regulated the arbitrator (see Cole v. Burns, 105 F.3d 1465 (D.C.Cir. 1997);

3.      A written decision, with a summary of the issues and description of the result (see Gilmer, 500 U.S.20);

4.      Arbitrator has same powers of judge or jury to award remedies - similar to court forum (see Cole v. Burns, 105 F.3d 1465 (D.C.Cir. 1997);

5.      No unreasonable costs or fees to employee – similar to court forum (see Green Tree Financial v. Randolph, 531 U.S. 79 (2000);

6.      Agreement to arbitrate must not be unconscionable – (see Circuit City v. Adams, 279 F.3d 889 (9th Cir. 2002); must be based on consideration – (see Michalski v. Circuit City, 177 F.3d 634 (7th Cir.1999); and must be voluntary – (see Tinder v. Pinkerton, 7th Cir., 9/17/02.     

 

A pre-dispute arbitration agreement may not deprive the arbitrator of the authority to award an employee any of the remedies that he/she could obtain in employment litigation.  While certain disputes may be excluded from arbitration, if a dispute is covered by the arbitration agreement, then the employee must be afforded the opportunity to all remedies that he/she would receive in Court for all covered claims. 

 

Fundamental fairness and basic due process must also be afforded to all of the parties if an employment arbitration agreement is to be upheld as valid and enforceable.  If an arbitration agreement lacks basic fairness and mutuality, then it will be found to be adhesive, unconscionable, and unenforceable.  The cost of arbitration cannot be an impediment to arbitration by an employee.  Courts have held that the cost of arbitration cannot be so high that it denies an employee the right to vindicate his/her claims.  Lastly, the arbitration clause should insure that the arbitrator follows the substantive law of the jurisdiction in which the dispute arises.  In short, arbitrators should be empowered to award all available legal remedies under the applicable law, while affording fairness and minimal due process standards to all the parties.

 

            A business dispute resolution policy (“DRP”) should provide the following considerations for employer and employee:

 

1.                  All employees and employer agree as a condition of employment (or application for employment) to submit all covered disputes to the DRP, and accept an arbitrator’s award as final and binding.

 

2.                  There should several steps in the DRP, including an open-door policy; an

informal conference; a formal mediation; and finally, a formal arbitration.  During the open-door policy, the employee should be encouraged to speak to immediate supervisors or higher-level managers to attempt to resolve the matter at the lowest possible level.  If the matter is not resolved, then the employee can meet with a company representative from the DRP to set-up a formal conference to talk about the dispute and try to resolve the matter.  If unsuccessful, a formal mediation, using a neutral third-party, should be employed.  If unsuccessful, the use of a formal arbitration should be utilized.

 

3.                  The DRP should emphasize fairness and due process throughout the process, and minimize bureaucracy and expense.

 

4.                  Some matters will most likely not be covered under the DRP, including worker’s compensation claims, unemployment benefits, pension or benefit claims, modification of company policy or procedure, or the like.

 

5.                  The employee should submit a written request for binding arbitration with a minimal arbitration fee.  Counsel should undertake necessary discovery, as managed by the arbitrator.  Further, dispositive motions can be filed and ruled upon by the arbitrator.

 

6.                  The arbitrator essentially substitutes for a judge and jury, and can decide in favor of the employee or employer, and can award the same remedies that would have been available in court for the type of claim that was brought.

 

7.                  The arbitration hearing should include opening statements; direct and cross-examination of witnesses; closing arguments; and briefing.  A stenographic record may be made by either party, with transcripts available to the arbitrator, and all parties at cost.

 

8.                  Witnesses, including experts, may be identified and used during the process.

 

9.                  A written decision will be issued within a certain number of days after

receipt of all evidence, applying the applicable federal and/or state law and

remedies.

 

10.              An employee is free to consult or file with state and federal employment agencies or other regulatory bodies.  Any filing of a lawsuit, however, will be subjected to a stay in light of a valid and enforceable arbitration agreement.

 

11.              The employee and employer must agree upon the selection of an arbitrator, and if one cannot be selected, then a national organization, such as American Arbitration Association will select the neutral arbitrator.  The parties can also agree to a panel of arbitrators, if desired.

 

12.              The arbitrator shall determine the weight and relevancy of any evidence or information.  While strict rules of evidence will not apply, privileges such as work-product, attorney-client, and compromise and offers will be enforced.

 

13.              Discovery disputes will be resolved by the parties or the arbitrator, as will requests for protective orders, and other procedural requirements.

 

14.              The authority of the arbitrator will be to decide all claims in accordance with the substantive law of the state or federal jurisdiction, or both, and the arbitrator may grant any remedy of relief that would be available if the claim had been asserted in Court.  If reinstatement is ordered, the arbitrator, at the request of either party, may order front pay instead of reinstatement, in accordance with applicable law.

 

15.              The effect of the arbitrator’s decision will be binding, unless applicable law provides otherwise.

 

16.              Confidentiality will ordinarily be a condition of the arbitration.

 

 

 

 

 

 

F.         Sample of Standing Rules & Procedures Used in Post-Dispute Employment Matters

 

1.                  The Arbitrator should not be informed about policy limits; coverage disputes; offers; demands; high-low agreements; or other “side agreements” or “settlement discussions.”

 

2.                  Issues of confidentiality, conflicts of interest, and ex-parte communications should be discussed and established among the Arbitrator, parties, and counsel.

 

3.                  The Arbitrator should be provided with an estimate of how long the arbitration will take; approximate number of witnesses; approximate number and nature of exhibits; experts, if any; and “out-of-the ordinary” exhibit requirements, such as computers, x-rays, demonstrative evidence, or the like.

4.                  The Arbitrator and counsel should come to an understanding as to how much time will be allotted for each presentation, including direct-examination, cross-examination, and rebuttal time; and on issues concerning sequestration of witnesses and confidentiality. 

 

5.                  The Arbitrator and counsel should agree on whether arbitration briefs will be filed before, at, and/or after the arbitration.

6.                  The Arbitrator should be informed of whether a record will be taken of the proceedings, and the financial arrangements for the same.

7.                  The Arbitrator and counsel should agree on the timeframe when a written decision will issue; whether the written decision will be a general award; whether there are any separate claims (i.e., loss of consortium) or factual issues that require a special award; and whether an explanation or narrative is required with the award.

8.                  Arrangements should be made between the Arbitrator and counsel for the return of all exhibits at the conclusion of the arbitration.

 

9.                  Billing arrangements should be agreed upon between the Arbitrator and the parties’ counsel.

 

 

 

 

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[1] For a good overview of the history of ADR, federal and state laws, see “Arbitration and Mediation of Employment Disputes” by Edward E. Shumaker, III, Presentation at 1st Annual Labor and Employment Law Conference.