Arbitration, mediation prove fast, private

by Richard L. Routman

for the Business Journal

One of the most significant legal trends today is the dramatic growth of employment lawsuits against employers.

If you're an employer, that's the bad news. The good news is that it is now within the power of the employer to divert those lawsuits from traditional litigation to innovative programs of mediation and arbitration. Depending on how that is done, it should be good news for both the employer and employee.

Courts around the country are now recognizing and putting their stamp of approval on mediation and arbitration programs for employee grievances, as long as the procedures are not patently unfair.

For example, if an employer includes a provision in the employee manual which calls for binding arbitration in the event of an employee claim, courts have held that employees are bound by that restriction even if they were hired before that provision was put in the manual.

By doing this, employers can avoid litigation and redirect the controversy into private arbitration proceedings which will be faster, more private and less expensive that defending the case in court.

In arbitration, a neutral person, often a retired judge or experienced attorney, convenes a hearing where the parties, with or without counsel, make informal presentations of their respective cases. Documents are received into evidence without the technical requirements of authenticating their genuineness. Affidavits and written reports are admitted in lieu of witnesses' live testimony, but witnesses may also testify.

In short, arbitration is more informal than court. While arbitrators are generally guided by the law, in most jurisdictions, the arbitrators are free to decide the case based on their own sense of fairness and justice.

Once the arbitration award is rendered, it is very difficult to press an appeal successfully. In order to overturn an arbitration ruling, there must be evidence of a "corruption" of the process, "evident partiality" by the arbitrator, or other similar defects. As a rule, courts do not tamper with arbitration awards. Hence, from beginning to end, the process can be calculated in terms of weeks or months as opposed to years.

An often unappreciated technique for resolving employee grievances, particularly at an early point in the life of the claim, is mediation. Mediation is where a neutral mediator meets with the parties, usually but not always with their counsel, for a meeting which normally takes two to four hours.

The mediator first meets with everyone together and then separates the sides and meets privately with each. All the conversations are confidential.

In the course of these meetings, questions will be asked, strengths and weaknesses of each side will be discussed, costs of not settling will be estimated and the parties' true interests will be explored.

The mediator will not make a ruling or decision. The parties settle or not as they see fit.

Because mediation is very informal, easy to set up and not binding, there is no risk in using it, not only before suit is filed, but even before the employee files a charge with the Equal Employment Opportunity Commission.

For example, if a company provided employees with a secure pathway to air their complaints, the company would then be able to deal with these issues on an internal, prompt and private basis. One example is requiring employees to confer with a company ombudsman or call a confidential hot line for information and guidance regarding complaints.

If employees have confidence that their complaints will not be met with retribution, then important issues can be addressed before they get out of hand.

It is wise for companies to create a combination mediation and arbitration program. If mediation did not resolve the problem in the first instance, the parties would know that in 30 days, a binding arbitration would occur.

If these innovative procedures are put into motion at the earliest feasible point in the course of the dispute, the benefits include the saving of expenses and company time, and the maintenance of employee morale and productivity.

Pre-dispute mediation and arbitration procedures can be used in other contexts with suppliers and customers, for example which call for mediation and arbitration of future disputes.

The most dramatic historical example of the pre-dispute arbitration provision occurs in the securities brokerage industry. With a mere addition of certain language to the new account forms, the industry unilaterally eliminated most, if not all, federal litigation arising out of customer complaints.

If an investor has a problem with his broker today, the dispute is arbitrated, not litigated.

A recent development in this field is the increasing use of voluntary mediation prior to the arbitration.

In any event, as an industry,

no doubt millions in costs were and are being saved as a result of these procedures.

These lessons can be applied to employment and business disputes as well.

(Richard L. Routman is the director of Midwest Arbitration and Mediation Inc., a Kansas City-based regional provider of mediation and arbitration services.)

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