What is ADR? What is the difference between mediation and arbitration? Contractors are familiar with arbitration of construction contract claims through the American Arbitration Association (AAA) because of the standard arbitration provision of AIA Document A201. What about disputes between employees and employers? Can they be arbitrated? How does mediation fit into the process?
ADR is an acronym for "alternative dispute resolution", a process that includes both arbitration and mediation to resolve disputes in lieu of a trial in court. There are significant differences between arbitration and mediation. Arbitration is a process that results in a final, binding decision by the arbitrator or panel of arbitrators. The decision may be filed in court and enforced as a judgement. It is in lieu of a trial in court before a judge or jury. Mediation is a settlement conference between opposing parties, such as an employee and an employer, using a third party as a mediator. The mediator is trained to help the opposing parties arrive at a compromise settlement. When a compromise settlement is reached, the agreement is reduced to writing and signed by the opposing parties. If a settlement is reached through mediation, there will be not need for arbitration.
Over the past decade, employment discrimination cases have been the primary cause of the rapid growth in federal court civil filings. As a reaction to the phenomenal growth in employment litigation, more and more contractors have adopted ADR to resolve employment disputes. Following the lead of international corporations, such as J.C. Penney, Shell Oil, and Southwestern Bell, contractors such as Brown & Root have adopted ADR plans in various forms tailored to the needs of their specific corporate culture and utilizing the services of the AAA. The companies who have chosen to use the services of the AAA have done so because of its long experience in resolving disputes without having to go to court and because the courts have found the procedures used by AAA to be fair to employees and employers alike.
Most ADR plans incorporate an open door policy in which attempts are made to resolve disputes within the chain of command. If disputes cannot be resolved internally, either the employee or the employer may first request mediation in an attempt to settle the matter. If mediation is unsuccessful, either party may request arbitration before an arbitrator or panel of arbitrators who will make a decision in lieu of a trial in court.
Companies who have adopted ADR plans usually distribute copies of the plans to all of their existing employees and give each of their new hires copies at the time they are employed. By continuing their employment, existing employees are deemed to have agreed to the ADR plan in lieu of trial in court. New hires will have agreed to the ADR plan by accepting employment. Since both employer and employee are required to use ADR instead of going to court, ADR plans give equal rights to both parties to a dispute.
Since the roll out of the ADR plans in the companies who have adopted them, feedback from employees and managers has been favorable. Employers have found that after a brief initial surge of complaints following adoption of ADR plans, request for ADR diminish, and lawsuits are substantially reduced. Perhaps the reduction in lawsuits and claims is a result of improved communications between employees and their supervisors. Perhaps the pro-active approach of effective ADR plans encourages early resolution of disputes by demonstration the good faith of all parties to the disputes. Whatever the reason, both employees and their employers seem to be happy with a new process to resolve work place disputes outside the glare of the court room and without lawsuit posturing and publicity.
Because of the added speed, confidentiality, and professionalism that ADR and the AAA bring to employment relations, ADR plans should be considered as an additional employee benefit. ADR can be less expensive, faster, less stressful, and more private. It can preserve good relations between employee and employer by airing grievances early, before positions are hardened and emotions prevent meaningful resolutions. ADR of employment disputes appears to be here to stay.
AAA, founded in 1926, is a not-for-profit public service organization.