Thoughts on Workplace ADR Design

Although most employers have had some process for resolving workplace disputes, the increasing role of courts in employment litigation has prompted many to pay more attention to how these disputes are managed and establish their own systems of alternate dispute resolution (ADR).

ADR BENEFITS

You devote effort to creating and communicating personnel policies and practices intended to assure fairness in your workplace and maximize employee productivity. Without some way of policing the system, there is generally no effective way to evaluate how supervisors carry out these policies. A nonretaliatory grievance system hospitable to employees who think they have been unfairly treated is a good way to keep supervisors accountable for personnel policies. Although a grievance undoubtedly causes moments of discomfort for managers, it is one of the best ways for supervisors to learn what is acceptable and what is not when dealing with subordinates.

The best personnel management plans sometimes just don't work. Sometimes the design is flawed; sometimes it is poorly executed. Whether the problem is personality or system design, a cluster of grievances is a warning that morale and productivity are being eroded. Dispute resolution processes sometimes lead to reappraisal and redesign of policies and practices.

Just as employees who raise issues are concerned about retaliation, supervisors and managers against whom grievances are brought are concerned about negative consequences. Supervisors and managers involved in grievances they couldn't resolve had lower performance ratings and higher involuntary turnover rates than those who either had not been grieved against or who had successfully solved them. It is in everybody's interest to get questions answered and concerns dealt with at the lowest possible level. This works especially well in a process that begins with informal discussions and proceeds through investigatory and conciliatory steps like mediation before proceeding to adjudicatory steps like senior management review, peer review or arbitration.

Today, one of the few assurances you can continue to give is that whatever your practices, employees will be treated fairly. An accessible grievance process that is fair in perception and fact is tangible recognition of your belief in the right of an individual employee to speak up, be heard and receive redress.

ADR FORMS

Workplace dispute resolution processes can be investigatory, conciliatory or adjudicatory. Often these forms are combined depending on the employee's complaint and your organizational culture.

Some companies have made investigatory procedures the core of their dispute resolution processes. This involves deputizing one or more managers to whom employees can go to discuss concerns. The individual then investigates, gathering facts as appropriate, and makes a recommendation on how the employee's concern or complaint should be addressed. Most organizations that rely on investigatory processes find that the standing, credibility and perceived neutrality of the investigator - both from the employee and from management's viewpoint - are critical to success. Otherwise, employees ignore them.

A recent but growing trend is the use of a dedicated, professional ombudsman to whom employees can go with complaints and concerns of any kind. Recruited from management and reporting at or near the top of an organization, but outside the management chain, ombudsmen hear employee concerns and complaints confidentially.

Investigatory processes are particularly well suited to personal complaints like sexual harassment where you have mandated investigation obligations but complaining employees want a more discreet vehicle than the usual appeal processes. They also work well for complaints where the individuals whose behavior is complained of are in the complaining employee's line of command.

Many companies rely on conciliatory processes like mediation as the means of resolving workplace disputes. Here, the employee and supervisor or other management representative meet in person with a mediator who is neutral to the dispute. The mediator helps and suggests compromise. He or she does everything reasonable to persuade the parties to reach an agreement. Unless both parties agree, there is no resolution. Mediation often works best if both sides have something to gain or lose if it fails. It is often used as a step in an adjudicatory appeal system where if no agreement is reached, a decision will be imposed or where the claim is something that could be litigated.

Especially when an employee complaint involves a statutory right, a mediator may involve an expert who is neutral to the issue but who can advise both sides about how the issue is most likely to fare at an agency or court. Because mediation does not preclude subsequent litigation if the parties fail to agree, its use is usually supported and encouraged by regulatory agencies.

Traditional workplace dispute resolution procedures are adjudicatory processes found in collective bargaining agreements. A formal complaint is lodged with an employee's supervisor or department manager. If the employee is dissatisfied with the response, he or she appeals to a higher level of authority. There may be more than one higher level and the various levels may be a single person or a panel.

While investigatory and conciliatory processes are relatively informal, adjudicatory processes tend to be more formal. To be fair in appearance and in fact, adjudicatory processes should use due process including:

• A "trier of fact," who is viewed by both sides as neutral and competent;
• Notice before any hearing to all parties who will be bound by a decision;
• Allowing the complaining employee to be present when his or her case is being presented;
• Allowing the complaining employee to present evidence and arguments in support of his or her position and to rebut evidence and argument of the opposing side; and
• An orderly proceeding tailored to the nature of the controversy with a clear end.

ADR PROCESS DESIGN ELEMENTS

Any ADR process must be seen by employees and management as effective and fair. There is no single formula likely to meet the needs of every organization. The design of a particular system is usually strongly influenced by organizational culture. Whether plain or elaborate and no matter which of the three basic forms is included when setting up an ADR process, consideration should be given to several procedural and substantive details.

What kinds of issues will the system address? Discharge and discipline are logical since those issues are frequently the basis for litigation. Will the process also accept matters that are a mix of personnel policy and supervisory judgment, such as job selection and performance appraisal? These may be areas in which supervisors would prefer to avoid the disruption of a grievance, but these issues are frequently involved in litigations.

Dispute resolution for sexual harassment should be provided. You may want to adopt special dispute resolution procedures for sexual harassment complaints and for similar issues that might arise between employees, like defamation or invasion of privacy.

Can an employee file a grievance over a rule or policy she believes unfair, or is the process limited to disputes over the application and interpretation of existing policies and rules? What, if any, issues are out of bounds? Can an employee use the process to protest a business decision that might have an adverse impact on employment security, like a decision to move jobs out of state or close an operation?

Should employees be required to use the ADR process? A Massachusetts case has ruled that a process obligatory on the employee and employer means there cannot be a suit without using the ADR process.

Apart from whether using ADR is mandatory, you need to consider whether any particular part is mandatory. While successful mediation means both parties have agreed to a resolution that is not mandated on either one of them, you can require some form of investigatory or conciliatory process before an employee is allowed to go into a formal adjudicatory one. The fact that an adjudicatory process is available may encourage compromise in the conciliatory stage.

What time limits do you want on an employee bringing a grievance under the ADR process? Does it depend on the nature of the grievance (for instance, a shorter one for job selection appeals)? Once an employee has entered the system, what time limits do you want between the steps of the process?

Although in most organizations formal grievances by management are counter-cultural, you should consider whether to include them, especially in mandatory processes. Where both management and non-management employees are covered by the process, it is important to balance accessibility for the least sophisticated employees with credibility for those at higher levels.

What if a group of employees wants to protest the application of a rule or policy. Are group grievances allowed? It may be useful to have an investigatory or conciliatory process for these complaints. Allowing them in an adjudicatory process requires substantial thought and planning. It is easier to restrict adjudicatory processes to individual complaints.

In investigatory processes, the essential characteristic of an ombudsman is credibility to both the employee and management. It is important legally that where the person doing this function is also an employee he or she is not an employee advocate who deals with you on the employee's behalf. If this happens, you may violate the National Labor Relations Act.

Mediation is a recognized professional skill for which training is available. Although there is no certification requirement in most states, some states, like Massachusetts, have laws that accord a privilege to mediators who have completed training. It is prudent that the training credentials be met. That way, if mediation fails, the mediator is out of subsequent discovery processes. The choice between inside and outside mediators is strongly influenced by the degree to which the insider is perceived as neutral to the dispute.

In adjudicatory processes (besides arbitration), the most important issues are impartiality and credibility. Depending on the organization, adjudicatory steps can be hierarchical beginning with a department manager, then a division manager, and then a company officer.

Companies have had considerable success with peer review panels to hear and decide employee complaints. This generally means a training program so that peers are aware not only of the applicable policies, rules, laws and obligations, but also of ways to conduct hearings and meet the requirements of due process. Sometimes these panels are not given final authority. They make recommendations to management about how a particular complaint or issue should be resolved. The problem with this approach, at least where the panel has nonmanagerial employees, is that it may be a violation of the National Labor Relations Act.

Although professional or managerial employees using your dispute resolution system may be perfectly capable of speaking for themselves, a good system should provide at least some direction and support to make the process user friendly. In actual practice, most employees, including those at higher levels, are reluctant to use ADR unless some form of personal assistance is available.

Obviously, if an employer is willing, the employee can be represented by outside counsel of his or her choice. But, arbitration aside, the zealous representation of an employee by counsel in an internal dispute resolution process is not particularly conducive to problem-solving.

In investigatory or conciliatory processes, the ombudsman or mediator can provide the services that outside counsel cannot. In adjudicatory processes you may wish to provide some direct assistance. Depending on the organization, human resources or industrial relations people may coach employees on how to present their issues. Some companies allow employees to select a fellow employee to represent them or speak in their behalf.

Where dispute resolution happens through ombudsmen, information rarely is a problem. When they come from management ranks, they are generally given access to information with the understanding that the complaining employee will not necessarily see it. This is an advantage of investigatory processes, especially where information may be relevant to the issue, but it may intrude on the privacy of other employees.

In mediation, a disagreement about what information should be made available is another issue to be resolved through the mediation process to achieve settlement.

Adjudicatory processes require thought about what kinds of information will be given to the employee that he or she might not normally have access to and how to resolve differences of opinion on this point. Even if no formal discovery is allowed, in order for a process to be fair, an employee who believes that he or she has been treated differently from others similarly situated may need some comparative data to confirm or refute that belief. The simplest way is to share information to the extent reasonably possible on a no name basis, striking a balance between privacy rights and due process considerations. Any disagreement can be resolved by the person hearing the appeal.

It makes sense to require that in an adjudicatory process, the employee write at least a simple statement summarizing the problem or disagreement and that the appropriate management representative prepare a written response. Each side would see the other's submission before the hearing. Putting concerns in writing crystallizes them and helps avoid unpleasant surprises. It also allows for a more efficient process. If the employee can appeal to a next level or to arbitration, the writings establish a record of what has been presented.

It is tempting to make an official record of grievance proceedings believing it may become useful if the dispute goes outside the company or to arbitration. This must be weighed against the chilling effect it may have on open exchange and a good resolution of the issue. When records are made, both grievants and managers tend not to be forthcoming. If you decide against having a record, it is a good idea to remind all of the participants so that no one brings a secret recording device.

Because successful mediation requires an agreement, it is should be written. No record of the proceeding itself is customary.

Investigatory processes generally require some note-taking and assembling of a record. Where the complaint involved is one that the employer has a statutory obligation to address, like complaints of sexual harassment, a record of the investigative process, including conclusions and recommendations, should be maintained. For other complaints, it is generally preferable not to maintain records. Most ombudsmen take no more notes than necessary to avoid creating a record. That way, there is no record to be used or subpoenaed.

Customarily, in grievances involving discipline and discharge, the burden is on the supervisor to show that the penalty imposed was deserved and reasonable. On the other hand, if the grievance is over the application or interpretation of another rule or policy, it makes sense to place the primary burden of proof on the grievant to show some kind of abuse. The purpose of a dispute resolution process is not to substitute the judgment of a fact finder, ombudsman, mediator, or an adjudicator for the judgment call of a supervisor or manager. While a good dispute resolution process holds management accountable for its decisions, it is not a substitute for good management.

Everybody should know what the possible outcomes are and what limitations apply. If an employee can establish that he or she has been dealt with unfairly, the remedy should try to make the employee whole. But what if the unfairness is that the employee wasn't selected for a job and the successful candidate has already been installed. Can the grievant bump the successful candidate? What about other candidates who may have been even better qualified than the grievant, but who did not appeal?

What if a grievance includes a claim that, if established, would be the basis of a monetary award? Should these damages be available in an internal dispute resolution system? If so, will any limits be set? Should you insist on a release from the employee as a condition of receiving the money? What guidance should be given to fact finders and adjudicators about the availability and amount of damages? A good ADR system will have considered these questions.

ARBITRATION

The law now allows you to make submitting employment claims to final and binding arbitrations, including statutory claims, a condition of employment and require that in doing so, employees give up the right to bring a subsequent lawsuit.

The first thing to consider when adding arbitration to an internal dispute resolution process is whether to preclude litigation altogether. If so, is arbitration limited to just statutory claims, or is an employee entitled to arbitrate any dispute?

To preclude litigation of statutory claims, arbitration would have to be available to employees as a matter of right. You could provide that employees are entitled to arbitration of statutory claims and may request arbitration of any other claim; you would have discretion to grant or deny the request. The problem with that arrangement is that the availability of arbitration could not be used to cut off contract claims based upon an alleged failure by you to follow your policies.

If arbitration is final and binding for contract issues but not for statutory claims, all of the design elements discussed generally apply, with a few additions:

• Is the employee allowed counsel? If so, you would also be so represented; if not, you should consider assuring that you will not use a lawyer either.
• Thought should be given to who pays and the extent the employee shares in the arbitrator's fee. Although you can bear the total cost if you wish, it is prudent to require employees going to arbitration to make some financial contribution.
• The rules for arbitration should be clearly explained in advance, particularly on discovery, briefs, and damages. Silence on these issues can lead to a presumption they are all available to the extent the grievant finds it desirable. Some independent models for arbitration rules are available from the American Arbitration Association and others. These tend to be more formal than you might need. When arbitration is not intended to preclude litigation, there is no reason you can't develop your own simplified rules.

Arbitration as a final and binding dispute resolution mechanism for statutory and contract claims to preclude litigation must be done carefully. Making this a condition of employment when you hire is now legal. Imposing arbitration on current employees is tricky.

In response, various arbitration providers like the American Arbitration Association have rules they believe will provide due process that is consistent with what might otherwise be found in courts. These rules provide for pretrial conferences, limited discovery by the grievant and compensatory and/or punitive damages. The American Arbitration Association has gone as far as to pledge not to administer arbitration hearings in which the processes do not comply with their standards.