COLORADO BAR ASSOCIATION’S
ALTERNATIVE DISPUTE RESOLUTION
SECTION’S
MANUAL
FOR THE USE OF ALTERNATIVE
DISPUTE RESOLUTION TECHNIQUES
IN
EMPLOYMENT DISPUTES
The Industry Focus Employment Committee of the Alternative Dispute Resolution
Section of the Colorado Bar Association and Denver Bar Association drafted this
updated 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.
DISCLAIMER
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.
ALTERNATIVE DISPUTE RESOLUTION IN THE WORKPLACE
It is beneficial to both employers and employees to do all they can to resolve
work place disputes as early and quickly as possible. Traditional litigation is
expensive, time consuming and rarely satisfying to the disputants. There are few,
if any, employers or employees who would argue against using processes that
allow them to stay out of court. Legal fees, hard feelings and the unpredictability
of the outcome make traditional litigation a risky business for everyone involved.
Over time, the federal government and to a lesser extent the remainder of the
public sector, has embraced the concept of alternative dispute resolution in the
workplace. This is evidenced by the proliferation of new and expanding
alternative dispute resolution programs in the federal sector.1
Alternative dispute resolution (ADR) or conflict resolution, is a generic term that
describes various methods of resolving conflict that can be applied in almost any
life circumstance. Since a very large portion of a person’s life is spent working, a
ripe and practical application of ADR is in the work place. There are few persons
who can truthfully state that they have not experienced conflict of some level in
the workplace. Recognizing the existence of conflict in the workplace and the
potential for the use of ADR in work place conflicts is the first step in the
implementation and use of the tools of ADR for the benefit of employees and
employers.
Although some work environments allow for employee input on policy and
procedure, it is almost always the responsibility of the employer to take the lead
in designing and implementing new and innovative policies and procedures. To
that end this manual is primarily designed for use by employers and attorneys.
However, it is not exclusive and may benefit employees who desire to become
educated in the various ADR options and their use.
ADR ADVANTAGES
ADR covers an extensive range of problem-solving processes that generally
resolve conflicts more quickly and less expensively than traditional litigation.
The advantages of ADR are numerous:
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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 promoting a true
reconciliation of various interests and needs of parties;
Relationships may be salvaged before engaging in adversarial
litigation ;
Fostering cooperative problem-resolution that encourages the
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preservation of working relationships;
Potential for Win/Win solutions or at least the avoidance of lose/lose
outcomes;
ADR provides the “opportunity to be heard” to disputants in a custom
designed, lower-cost, less rigid system;
Reduction of attorneys fees and related costs of dispute settlement.
There are several options available when considering ADR. Open Door policies
and arbitration have been the most commonly used forms of ADR over many
years with mediation gaining ground in recent times. However, other options
may be worth consideration when exploring options for early dispute resolution.
Partnering, interviewing and counseling, peer review, fact-finding/investigation,
negotiation, conciliation, mediation, mini-trial, arbitration, med-arb hybrids,
ombudsman, and private judging are all optional forms of ADR that share key
benefits. These processes are defined in various ways and may be more or less
successful in different settings. They can be blended to achieve an ADR process
that best serves the needs of the individuals involved and the organization as a
whole. However constructed, these processes will have several common
characteristics:
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They are more “fluid” and “flexible” than formal;
They provide the employee an opportunity to be heard in a manner
that permits dignity and in a forum that suggests that fairness will
prevail;
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 coworkers line up on either side;
ADR looks at alternative solutions that may fall outside the
consideration of how much money the claim is worth. It may also
explore core interests and the parties’ ultimate goals;
Issues surface that reflect areas of common concern to workers or
managers;
The facilitated process used is responsive to the existing corporate
culture for problem solving and enhances those current mechanisms.
ADR OPTIONS
Although precise definitions of many of the ADR options blur depending on the
source of the information, some common forms are described below.
OPEN DOOR
Open Door policies generally consist of a stated encouragement for employees
with problems or disputes to informally meet with their supervisor to discuss the
matter with the additional step(s) of moving up the chain of command or the
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opportunity to address the issue to someone in human resources. Usually these
policies also provide that if the employee’s problem concerns the supervisor that
the employee may go to the supervisor’s superior or to human resources for
assistance in resolving the issue.
NEGOTIATION
A process by which disputants address their differences with one another
through conference, discussion and compromise, in order to resolve them.
FACT FINDING/INVESTIGATION
An investigation of a dispute by an impartial third person who examines the
issues and facts in a case, and may issue a report and make recommendations.
The fact finding is usually triggered by an employee complaint and can include
agreement of the parties as to the neutral, expert or joint fact finder. When used
as an ADR tool, a neutral, confidential investigation of the facts of the complaint
including follow-up with the complaining party and any other participants in the
dispute is the usual form. Fact Finding can also be used as a tool to support
other ADR procedures.
PEER REVIEW
Peer Review is a powerful form of ADR that usually takes the form of a review
panel consisting of co-employees and supervisors all chosen by the complaining
employee from a trained pool of persons willing to serve in such a setting. The
panel is typically given limited power to call witnesses and each side may present
the issue without outside representation. A decision is made by a majority of the
members of the panel. The decision is generally binding on the employer but not
on the employee. This process is most often coupled with other forms of ADR
such as mediation or arbitration and rarely stands alone.
OMBUDSMAN
An ombudsman, ombudsperson or just ombuds is a neutral party that listens to
the employee’s problem or complaint and explores options available to the
employee to resolve the dispute. An ombuds is an employee of the company but
has a great deal of autonomy to assure neutrality and confidentiality. Some
ombuds become directly involved in resolving the dispute if the employee
consents and the issue is complex. An ombubs does not generally impose a
solutions but use persuasion to encourage the parties to consider the
recommendations.
FACILITATION
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The use of a third party focusing on the procedure of problem-solving steps
rather than becoming focused on the substance of the conflict. A facilitator
usually works with all of the participants at once to reach a common goal.
CONCILIATION
A third party neutral assists the parties in building communication and promote
openness so that the parties can move toward resolution. Clarification of issues,
perceptions of the parties and building trust for cooperative problem solving.
MEDIATION
Mediation is a consensual process that can be structured in any manner in which
the parties agree. Generally, one or more experienced and specially trained
neutral, selected by agreement of both parties, conducts one or meetings 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 all parties to the conflict. The selected mediator commits the time necessary to
understand the issues involved and to assist in resolving the dispute
expeditiously. The goal of mediation is to resolve the dispute voluntarily and
mutually in a speedy, cost-effective and private manner where the parties retain
control of the outcome.
Although mediation is a consensual process and any resulting agreement is
voluntary, there may be occasions when the participants are required to attend
and participate in a mediation when mandated by an agreement to mediate, a
mandatory employer policy or by court order.
If a dispute is resolved in mediation it should be reduced to writing and signed by
the parties to insure the finality and enforceability the agreed upon resolution.
ARBITRATION
Arbitration has been a popular and useful ADR tool for many years. Arbitration is
a structured and more formalized “trial” process before an agreed-upon neutral
arbitrator or panel of arbitrators that is usually the last step in an ADR program.
With arbitration the parties to the dispute give up any control they may have had
to decide the outcome and give all of the power to the arbitrator who renders
decisions in matters 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.
Generally, employers and employees may agree or not to arbitrate all disputes
arising under an employment contract whether part of a collective bargaining
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agreement. Some employers have made an employee’s acquiescence to an
arbitration clause requiring submission of a dispute to arbitration a condition of
employment. The Supreme Court has approved mandatory arbitration
agreements as long as the agreement meets minimum standards of fairness and
due process.2
However, the Supreme Court ruled that arbitration agreements do not prevent
the Equal Employment Opportunity Commission from pursuing relief on behalf of
an alleged victim of discrimination.3
Although mandatory and voluntary arbitration as part of a comprehensive ADR
program may be a useful tool in the quest to avoid traditional litigation it may be
most effective if used in conjunction with other ADR tools.4
Arbitration can take several forms including binding, non-binding(advisory), final
or last offer(baseball), or high-low(bounded).
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 Uniform Arbitration Act, the
Federal Arbitration Act, the Administrative Dispute Resolution Act or rules of the
various private ADR organizations and associations.5
MEDIATION-ARBITRATION
“Med-Arb” is a hybrid combining mediation and arbitration into one process. For
example, the parties may agree to first submit the dispute to mediation then
arbitrate the case through a process known as “last and best offer.” Generally the
third party neutral acts as both the mediator and the arbitrator. As with any of the
processes involving the selection of a neutral is of great importance.
DESIGNING AN ADR PROGRAM
All organizations have conflict and ignoring existing conflict is counter productive
to most relationships, especially in the workplace. If it is appropriate to consider
an ADR program in the workplace, it is critical to success that the program be
designed specifically for the culture, needs and perceptions of the employees
and employer.
Generally, four areas that drive the need for an ADR program are culture, costs,
crisis and compliance. The culture of the workplace, how people interact, can
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determine whether or not an effort to introduce ADR will receive acceptance or
rejection from both employees and managers. However, a well supported ADR
program can be a catalyst for cultural change in the workplace. Costs are a
powerful driver of ADR programs for two reasons. The most obvious cost is the
external cost of litigation. Internal costs are also significant. Internal costs
include turnover, loss of productivity, loss of management focus on the real
business of an enterprise petty sabotage, and even customer dissatisfaction or
loss, from contact with unhappy employees. These significant costs are usually
much greater than the costs of ADR implementation and operation.
Sometimes a crisis in the workplace, legal or relationship driven, can become the
catalyst for implementing ADR. Usually the crisis situation creates significant
issues with community reputation and public scrutiny. An effective ADR program
with early intervention could minimize these potential problems. Finally,
compliance with new laws may require an employer to develop an ADR program.
The first step in designing an ADR program is defining what a successful
program will be. The goals of the program, changing company culture, lowering
costs, mitigating crisis, complying with new laws, or any other identified goal; will
drive what success means. Measuring this success will be accomplished
through an evaluation process specifically designed to determine if the program
is successful as defined. It is essential to the success of an ADR program to be
able to demonstrate effectiveness and goal accomplishment.
Essential to the success of any ADR program is buy-in from the stakeholders in
the process. Typical stakeholders are executive management, human
resources, legal counsel, union representatives, department heads and most
critical, employees. It is always important to remember that without buy-in,
acceptance and use by employees, an ADR program is useless and will fail.
In order to gain buy-in it is necessary to identify the clear goals of an ADR
program, assess any existing conflict resolution systems, identify the appropriate
ADR tool and examine laws and regulations that may apply to the conflict that is
targeted for inclusion in the ADR program. In identifying goals, the designer will
need to learn what conflicts exist, anticipate potential conflict in the workplace
and whether there is a need to apply ADR tools to resolve the conflicts. Once
the need is identified and the need for ADR is established, the existing conflict
resolution systems should be examined in detail with a focus on the current level
of use and success.
After determining the need and target of the ADR program an appropriate ADR
tool must be chosen to meet the stated goal. Careful creativity must be used to
pick the right method base upon the need. Not every ADR tool is appropriate in
every situation.
When an appropriate ADR tool is chosen, the stakeholders should be rallied to
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support the implementation of training and promoting the program to both
management and employees. This step is possibly the most important to the
success of the program. Although, “buy-in” from management and employees is
important from the beginning, this step is the opportunity to sell the idea with
detail and support.
The final startup step is to create a method of evaluation. Many different choices
are available for evaluation and should be carefully considered to effectively
target the specific goals of the ADR program that were identified in the beginning
of the process. Other than methodology, the ADR program administrator must
decided if internal or external evaluators should be used and how to whom the
results will be presented.
In summary the steps to designing an ADR program are:
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Target the program at specific needs
Define realistic program
Choose the appropriate ADR tool
Enlist help of diverse stakeholders
Identify and implement needed training
Design an objective evaluation tool to measure success
The lack of a formal program does not prohibit the use of ADR in individual
cases; however, an ADR program is best through a preplanned policy that is
published to employees.
A new and potentially powerful incentive for having an ADR program in place is
the EEOC pilot program that allows employers with programs meeting certain
criteria to attempt to resolve the complaints without the involvement of the
EEOC.6 Time will tell whether this program is successful and is expanded for the
benefit of all employees and employers.
IMPORTANT CONSIDERATIONS FOR USING ADR
Fairness and Due Process
In any ADR program it is mandatory to have procedures and processes in place
that will assure that the program is fair and complies with due process
requirements. The most difficult question is whether an employee can or should
be required to waive rights and remedies that are allowed under the laws that
govern the employment relationship. Without settling this highly charged issue, it
is well accepted that there are several elements that should be included in an
ADR program to meet or exceed the requirement of fairness. These elements
are:
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Voluntary participation
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Employer funded
Right to retain counsel
Exchange of important factual information
Neutral process for selection of neutral
Complete confidentiality
Preservation of legal remedies
Disclosure of Conflicts of Interest
Without a process that is fair and meets applicable due process guidelines is
potentially subject to invalidation.
Choosing an Alternative Dispute Resolution Professional
Great care should be taken when choosing an ADR professional for any dispute.
In general, a high quality neutral third-party, whether a mediator, an
“ombudsman”, a “peer review” panel, a trained facilitator, or a fact finder share
similar attributes:
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They subscribe to the Model Standards of CCMO and the CBA;
They are formally trained in problem-solving;
The third-party should have a background or expertise satisfactory to
the parties in the dispute if the understanding would be important to
understanding the issues;
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;
Selection of the right ADR professional for the situation is very important.
Choosing the right ADR professional to serve as a neutral third-party is different
than choosing an advocate or attorney. The ADR professional should be the
mutual choice of both parties. Interview the ADR professional to determine style,
approach, methods, and chemistry.
The skills of ADR professionals vary widely. There are programs in Colorado and
nationwide that provide training for ADR professionals in the process skills and
rules of the ADR process. Standards of conduct for ADR professionals have
been developed. There is, however, no formal certification program for ADR
professionals in Colorado.
Ensuring the Success of ADR
How can the early use ADR tools be effective? To achieve a satisfactory result
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through the use of ADR you must plan carefully. A few suggestions:
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Determine with the assistance of the ADR professional whether the
dispute is one that is appropriate for the ADR process. Certain issues
and claims will not be;
Encourage the use of ADR whenever disputes arise;
If needed, involve the third party as early as practicable;
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 to attempt resolution in good faith.
Use of ADR through a Formal Process or on an Ad Hoc basis
The use of ADR can be implemented on an ad hoc basis as disputes arise as
long as the parties to the dispute are agreeable. Offering to solve a dispute with
an ADR tool can be proposed at any time. Although best used as early in the
dispute as possible, mediation can be and is a commonly used conflict
resolutions tool after the dispute has been elevated to a level of agency
investigation or even after the litigation process has begun. In fact, a Colorado
attorney is required to advise his/her client about the use of ADR.
Other Factors to Consider
Whether and in what circumstances the mediation is confidential, which party is
responsible for the payment of fees and expenses, locale of the meetings, or any
other issue of concern to the parties are additional issues that should be
considered. For example a policy or agreement may include language:
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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.
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The mediation shall be held in a mutually agreeable place.
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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 if possible.
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CONCLUSION
In the face of increasingly more and more employment related litigation
employees and employers would be well served by considering the use of ADR
to resolve conflicts in the workplace as they arise.
RESOURCES
Interagency Alternative Dispute Resolution Working Group http://www.adr.gov/workplace.htm
Federal Mediation & Conciliation Service - http://www.fmcs.gov/internet/
Equal Employment Opportunity Commission http://www.eeoc.gov/mediate/index.html
Colorado Council of Mediators - http://www.coloradomediation.org/
Association for Conflict Resolution - http://www.acresolution.org/
American Bar Association Section of Dispute Resolution http://www.abanet.org/dispute/home.html
American Arbitration Association - http://www.adr.org/
1
See www.adr.gov/workplace.htm
Circuit City Stores v. Adams, 532 U.S. 938, 121 S.Ct. 1399(Mem), 149 L.Ed.2d 342, (2001)
3 EEOC v. Waffle House Inc., 534 U.S.279, 122 S.Ct. 754, 151 L.Ed.2d. 755, (2002)
4 The law concerning the enforceability 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.
5 Organizations with dispute resolution rules include, among others, the American Arbitration
Association, the Center for Dispute Resolution, Judicial Resolutions, Inc., and Judicial Arbiter
Group, Inc.
6 See http://www.eeoc.gov/mediate/referralpilotqanda.html
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