Indiana Conflict Resolution Institute
 Research Paper: ADR in the Workplace











Alternative Dispute Resolution in the Workplace
by Professor Lisa Bingham, Indiana University


Contents

I. What Is ADR and Why Should We Consider It?

A. What is ADR?

An alternative to traditional litigation or administrative agency complaint processes, a/k/a appropriate dispute resolution, ADR includes consensual, voluntary processes where there is no judge or decision-maker (such as negotiation, mediation, and facilitation), as well as adjudicative processes where the parties hire a private judge or decision-maker (such as factfinding, binding and non-binding arbitration, summary jury trials, and minitrials and early neutral evaluation).

B. Why use ADR?

Many employers and employees have found that they can resolve a given dispute more quickly, with lower legal fees, and create a longer-lasting and more mutually beneficial resolution through ADR than through the courts.

1. A U.S. Department of Labor study found that mediation saved time and money compared to litigation.

2. Studies done at the United States Postal Service found that supervisors and employees were more satisfied with mediation than traditional Equal Employment Opportunity Commission case processing, and that mediation had the additional benefit of improving conflict management and communication skills at the workplace (Bingham 1997, Anderson and Bingham 1997).

3. Studies at the USPS also showed that sites where mediation was available had significantly lower rates of appeal to the EEOC than sites where mediation was not available.

4. Other surveys show that a growing number of private sector employers are using mediation and binding arbitration to limit their potential liability for punitive and compensatory damages in lawsuits in state and federal court based on allegations of discrimination (race, age, sex, national origin, sexual harassment, marital status, disability, etc.) or wrongful dismissal (whistle-blowing, retaliatory discharge, or breach of express or implied contract).

C. Who is using ADR?

1. The American Arbitration Association and Forbes Magazine sponsored the first ADR superconference in Washington DC a year ago, and it was attended by hundreds of representatives of the Fortune 500, many there to describe newly launched in house ADR programs. ADR is an accelerating trend at the workplace.

2. The in-house counsel for the Fortune 500 created the Center for Public Resources and the CPR Institute, and have signed pledges to use ADR instead of litigation to resolve disputes among themselves. They identified ADR as a major way to reduce expenditures for hired gun outside counsel.

3. Congress passed the Administrative Dispute Resolution and Negotiated Rulemaking Acts of 1990 and 1996 to encourage all federal agencies to use ADR not only within agencies but with contractors and the general public. President Clinton issued an executive order encouraging agencies to use ADR.

4. The Indiana Supreme Court has supported the use of ADR, and adopted rules for registering mediators in the state who help resolve civil and domestic disputes in state courts.

5. The Indiana General Assembly passed legislation to authorize state agencies to use mediation to resolve disputes.

II. Methods of Alternative Dispute Resolution

A. Mediation: Mediation is a process in which the parties use a third party neutral to assist them in negotiating a mutually agreed to resolution of their dispute. The neutral must have no personal interest or stake in the dispute, and has no power to decide the dispute or impose an outcome on the parties. Mediation is assisted-negotiation.

1. Facilitative or transformative: In this form of mediation, the neutral focuses on empowering the parties to make their own informed decisions regarding the issues in dispute, attempts to foster recognition of each party’s perspective, concerns, and interests, and helps the parties generate their own options for settlement. The neutral is scrupulously careful to express no opinion on the merits of the case, and may not advise the parties what to do. The neutral makes every effort possible to give the parties control over the process and outcome of mediation. This form of mediation is in use at the United States Postal Service in its REDRESS™™ program for employment disputes, and is more commonly found in domestic relations mediators.

2. Directive: This form of mediation is more often practiced by lawyers and retired judges hired as mediators to assist other lawyers in resolving civil litigation. The mediator takes charge of the mediation, advises the parties about likely outcomes if the case goes to trial, generates options for settlement, uses various tactics to pressure or persuade the parties to settle, and sometimes involves the mediator acting in a position of authority to "knock heads". This form of mediation is also common in labor relations and collective bargaining.

3. What if we settle in mediation? If you reach a mutually agreed to resolution through mediation, it usually takes the form of a written settlement agreement containing an exchange of promises, for example one party agrees to pay or do something and in exchange the other party drops the complaint or lawsuit. This settlement usually takes the form of a contract, which, if violated, can be take to court and enforced.

B. Early Neutral Evaluation: In this process, the parties retain the services of a third party neutral with experience in this kind of dispute or litigation to evaluate the facts of the specific case, and give the parties an informed opinion about the likely outcome if the case goes to trial. The opinion is called an early neutral evaluation, and is rendered as early in the development of the dispute as possible, with the goal of getting the parties back to the negotiating table to work out their own settlement.

C. Arbitration: In this process, the parties essentially hire a private judge or decision-maker with subject matter expertise in the area in dispute to decide the case for them. The arbitrator conducts a quasi-judicial hearing which usually involves opening statements, direct and cross examination of witnesses, introduction of exhibits, taking of other evidence, closing arguments and/or posthearing briefs. The arbitrator may conduct independent legal research. The arbitrator writes an award explaining who won and who lost and why, and also awards a remedy if appropriate, which may include money damages, attorneys’ fees, and arbitrator fees and costs. Usually, the arbitrator makes no effort to get the parties to settle the case.

1. Binding: The arbitrator’s award is binding, and enforceable in court through a motion to confirm the award. The court will issue a judgment, and will not permit a new trial on the underlying dispute. The award is final unless there has been egregious arbitrator misconduct, like collusion or fraud.

2. Non-binding or advisory: The arbitrator’s award is much like the early neutral evaluation. It is not binding on the parties, but represents a recommendation for how the parties should settle the dispute.

3. Factfinding: The award represents an opinion that determines only the facts in dispute in the case, and does not make a decision on how to apply the law or contract in dispute.

D. Providers of Neutrals:

1. Third Party Administrators: The leading third party administrators of alternative dispute resolution nationally are the American Arbitration Association (with 26 offices nationally, including nearest offices Cincinnati, Cleveland, and Chicago) and JAMS-Endispute (with a practitioner in Indianapolis and nearest offices in Chicago). Third party administrators maintain lists of mediators and arbitrators from which (for a fee) parties may mutually select a neutral.

2. Indiana Providers: There are several associations which can provide you with more information on neutrals in Indiana. The Indiana Conflict Resolution Institute is attempting to put this information on its website (www.indiana.edu/~icri). The Indiana Association of Mediators, the Indiana Chapter of the Society for Professionals in Dispute Resolution, and the ADR Section of the Indiana State Bar Association all maintain membership lists. In addition, the list of mediators registered to practice in civil and domestic litigation is available from the Indiana Commission on Legal Education.

3. State agency: The Indiana Education Employment Relations Board maintains a list of labor mediators and factfinders, from which it may provide mediator services to state agencies.

III. Is There a Right and a Wrong Way to Do ADR?

A. Structural bias: There have been some employer abuses of ADR. Some employers designed arbitration programs that were mandatory (i.e. the employee was forced to agree in advance to arbitrate any dispute as a condition of initial hire or continuing employment). They also denied employees a right to legal counsel in the arbitration hearing, or meaningful discovery of evidence, or a right to participate in the selection of the arbitrator. This resulted in a skewed system. (Bingham 1995, 1996, 1997, 1998; Bickner, et al. 1997)

B. A Due Process Protocol for the Mediation and Arbitration of Statutory Employment Disputes (1996). To remedy this, leading organizations (ABA, AAA, ACLU, NELA, AFL-CIO, SPIDR, NAA) negotiated a model Protocol with minimum due process guarantees. The leading providers (AAA and JAMS-Endispute) will not administer an employer ADR plan unless in complies with the protocol. It is likely that courts will refuse to enforce employer plans with egregious due process violations. A copy of the Protocol is in your conference materials

IV. Conflict Management System Design

A. Ad Hoc ADR: You can do ADR on an ad hoc basis, that is, on a case by case basis as disputes arise. All that is required is that you and the other party mutually agree in writing as to what form of ADR you will use and who the neutral will be.

B. ADR Systems: You can also build ADR into your in-house grievance or conflict management procedure. It is possible to design an ADR program no matter how large or small your workplace. Recent decisions of the Supreme Court emphasize that if an employer has in place an effective grievance procedure for employees with complaints of sexual harassment, and the employee refuses to use the procedure, the employee may lose his or her right to sue. ADR can be a step in your grievance procedure, and part of your personnel manual.

C. Participative Dispute System Design: You can use designing an ADR system for your workplace as a way to change the conflict climate there if you use a bottom up instead of top down approach to conflict management system design. You can enlist a task force of employees to discuss the way disputes and conflicts are handled at the workplace, collect information on better approaches, and develop a system that better meets the needs of your workplace. Conflict management systems design takes into account all the avenues available to your workforce and your customers for getting conflict addressed, and identifies unmet needs.

V. Resources

A. Websites: There are a number of useful sites on the World Wide Web where you can find more information about ADR:

For more websites about ADR, please see our Links page.

B.  ICRI: The Indiana Conflict Resolution Institute is working to build a resource base for Indiana businesses, non-profit organizations, and state and local government to facilitate broader use of ADR. Although only a year old, we have developed executive education courses on negotiation and dispute resolution, have received funding from the William and Flora Hewlett Foundation to become a national center for research on ADR programs in organizations, and are collecting information on ADR providers in the state for our website.

Indiana Conflict Resolution Institute
Last updated: July 30, 2004
Comments: ICRI Administrator
Copyright 1999 - Indiana University, Bloomington