What is Alternative Dispute Resolution (ADR)?
The relationship between employer and employee is continuing and dynamic. Because of this, occasionally there are employment disputes or disagreements. The way a company handles these issues can either drive the parties further apart or serve to enhance and even strengthen the overall employee/employer relationship. Unfortunately, our legal system in this country is based on an adversarial model. Applying our traditional legal adversarial system to work place disputes and issues is rarely, if ever, the best means of resolving work place disputes. The adversarial system is expensive, disruptive and protracted and, by its very nature, tends to drive the parties further apart.
ADR is simply a means to resolve disputes other than traditional court and administrative litigation. ADR can involve a broad spectrum of activities including internal grievance procedures, mediation, peer review, and arbitration. A carefully structured ADR policy would typically use different types of procedures at different stages of the employment dispute. For example a common ADR policy would have progressive steps beginning with an employee communication step where the issues are discussed directly with a supervisor. If the issue is not resolved, the employee would appeal to higher management or an executive panel. If the issue is a legal issue and cannot be resolved at the first two levels, the process would proceed on to other dispute resolution forms such as mediation and then arbitration as the final steps.
Benefits of having an Employment Dispute Resolution (EDR) Systems Program:
- Customized ADR turn-key program, designed specifically for your industry and your corporate culture
- Customized plan documents and forms
- Easy-to-understand customized training materials
- Personal consultations with EDR Systems professionals throughout the life of the plan
- Informal mechanisms to resolve problems before they become serious
- Quicker resolution of employment-related disputes
- Significant cost reduction for risk management
- Reduced exposure to punitive damages and emotional distress
- Minimization of exposure to frivolous claims
- Avoidance of unreasonable settlements
- Increased management focus on core business(es)
- Higher confidentiality and privacy, since employee disputes are resolved in a private forum
- Reduced need for unions
- Improved employee relations/morale
- Protection from Class Action lawsuits
Alternative Dispute Resolution and the Law
Originally, courts were very suspect of ADR procedures. Early decisions held agreements to arbitrate void as usurping the function of the court. As court dockets increase, however, courts began searching for ways to reduce and better manage their case load. As a result, the perception of ADR as undermining public policy quickly dissipated.
Legislation has been enacted at the federal and state levels authorizing various forms of ADR. The Supreme Court has firmly established that agreements to arbitrate employment disputes, including discrimination complaints and work place law claims, are generally valid and enforceable. The key is making sure that your program is executed properly. At EDR Systems, we stay apprised of recent court decisions and changes in the law to make sure that your program is current based on the existing legal standards.
For more reading on Alternative Dispute Resolution and How it Can Benefit Your Business:
Measure the Costs of Delays in Dispute Resolution Busting Abritration MythsFacts about Employment Dispute
- Every day employers pay to settle claims because they don’t want to spend the time and money to fight them in court.
- Over 100,000 discrimination charges were filed with the Equal Employment Opportunity Commission last year.
- Over 15,000 sexual harassment cases were filed last year (approximately 60 every working day)
- The Average Jury Award is about $600,000 for all employment claims. (This does not include attorneys fees and costs)
- The average settlement for an employment practices issue is $300,000.
- The Average Attorney charges $300 an hour
- Traditional Litigation take over three years or more to go to completion at the trial level. This timeline doesn’t include any potential appeals.
By using our ADR program, our clients have been able to resolve 95% of issues without advancing to arbitration. For those claims that do make it to arbitration, the process takes less than a year allowing claims to be resolved in about 20% of the time for conventional litigation.
Frequently Asked Questions
What types of employee problems or issues are covered by an ADR program?
Can an employee use a lawyer during the ADR arbitration process?
Is there a deadline for filing an arbitration claim as a last step in the ADR process?
Who pays for the ADR process?
If the matter goes all the way to arbitration and an award or decision is issued, can the employee subsequently appeal the arbitrator's award, or can the employee subsequently sue the employer?
Does the employee have a right to sue the employer to resolve a dispute that arose prior to the adoption of an ADR program?
Does the employee have the right to sue the employer to resolve a dispute after the employment of that employee has been terminated?
I have always thought that the ability to file a lawsuit was a legal right of a citizen. Is it legal for an employer to take way an employee's right to sue?
Do employees give up any right to damages or other remedies they may have under current law?
Litigation can be long and drawn out. How long does arbitration generally take by comparison?
Don't existing employees resist the adoption of these programs?
If I adopt an ADR program, won't it just increase the number of employee complaints? Won't it just be easier for employees to complain?
If I adopt an ADR Program, do I need employment practices liability (EPL) insurance?
Are ADR programs difficult to roll out to employees?
Actually, the roll out is very simple. All newly hired employees sign an arbitration agreement as a condition of their employment. Employers simply work this into the new hire processing and get the agreement signed as part of that process like I-9s and W-4s and the like.Existing employees do not actually sign an arbitration agreement. The programs are introduced to current employees in a variety of ways and their agreement to the program is expressed by their continuing their employment with the employer and accepting the benefits of that employment.
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What types of employee problems or issues are covered by an ADR program?
We recommend broad based programs which can be used to resolve any work related issue or concern. However, issues concerning workers compensation and unemployment insurance compensation are excluded. Furthermore, while employees cannot commence litigation outside the arbitration provisions of the program, they do retain the right to file complaints with governmental agencies such as EEOC or the DOL.Back to Top
Can an employee use a lawyer during the ADR arbitration process?
Yes, employees have the right to have a personal representative or lawyer assist them as they deem appropriate.Back to Top
Is there a deadline for filing an arbitration claim as a last step in the ADR process?
State and federal laws contain statutes of limitations which prescribe the time frame within which parties must file a lawsuit to have their disputes resolved in the court system. In the ADR programs recommended by EDR Systems, these same statute of limitations will apply in determining the time frames during which an employee must file a request for arbitration.Back to Top
Who pays for the ADR process?
Generally the employer pays for the mediation step if one is included in the ADR program. If the matter goes to arbitration, which is the last step in the process, the employee is required to pay a nominal filing fee and the employer pays all remaining costs.Back to Top
If the matter goes all the way to arbitration and an award or decision is issued, can the employee subsequently appeal the arbitrator's award, or can the employee subsequently sue the employer?
No. The arbitrator's decision is final and binding on both parties and an employee could not subsequently sue the employer.Back to Top
Does the employee have a right to sue the employer to resolve a dispute that arose prior to the adoption of an ADR program?
No. The employee's right to sue terminates effective with the adoption of the ADR program regardless of whether the dispute arose before or after implementation of the ADR program.Back to Top
Does the employee have the right to sue the employer to resolve a dispute after the employment of that employee has terminated?
No. The employee must use the ADR process irrespective of the current status of their employment even after their employment has been terminated.Back to Top
I have always thought that the ability to file a lawsuit was a legal right of a citizen. Is it legal for an employer to take away an employee’s right to sue?
Yes, the ADR programs recommended by EDR Systems do not, in any way, require an employee to give up his/her right to pursue a claim for damages or to have a dispute settled by an impartial, third party. It does however change the forum in which the dispute is heard. Before adopting an ADR program an employee and employer would resolve their disputes in courtroom litigation. With an ADR program the forum is changed from courtroom litigation to arbitration litigation.Back to Top
Do employees give up any right to damages or other remedies they may have under current law?
No. The ADR programs recommended by EDR Systems preserves the right of employees to obtain, in arbitration, any right or remedy that they could obtain in conventional litigation by a court or jury.Back to Top
Litigation can be long and drawn out. How long does arbitration generally take by comparison?
Conventional employment litigation usually runs a course of 2 to 5 years depending on the issues and the court in which the issues are being litigated. By comparison, arbitration will usually run its course in 3 to 9 months and is generally 20% or less than the cost of conventional litigation.Back to Top
Don't existing employees resist the adoption of these programs?
No. To the contrary, studies show that most employees favor an ADR program over conventional litigation. Also, in our experience, it is very unusual for employees to resist the adoption of ADR programs. It all depends on how the program is presented and explained to the employees.Back to Top
If I adopt an ADR program, won't it just increase the number of employee complaints? Won't it make it easier to complain?
Just about every employer we work with raises the issue of whether they will experience an increase in the number of complaints. In every program we have rolled out the results are just to the contrary. In actual practice, employees and their supervisors begin communicating. Increase in the level of communication always results from an ADR program. Employees are required to communicate any employment concern, and managers are required to listen to those concerns seriously, treat employees with respect and attempt to resolve the problem. And that is exactly what happens. Employees and managers begin talking. When people talk, problems are resolved before they grow into bigger problems. The result is the most synergistic human resource program the employer has adopted.Back to Top
If I adopt an ADR Program, do I need employment practices liability (EPL) insurance?
The ADR programs we recommend are separate, stand alone programs, and we make no recommendations regarding EPL coverage. Many of our clients who already have EPL coverage, have elected to continue that coverage, but have increased their retention levels and significantly reduced premiums as a result. Others discontinued coverage after experiencing a significant reduction in EPL exposure as a result of adoption of a ADR program.Back to Top
If you have any questions not addressed here, please contact us and we'll be happy to discuss them with you.