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Mediation is Alternative to Adjudicating Disputes (NLJ)

Thursday, June 17, 2004

By: F. Peter Phillips

F. Peter Phillips is senior vice president at the CPR Institute for Dispute Resolution. This article was adapted from testimony given before a special meeting of the U.S. Equal Employment Opportunity Commission on Dec. 2, 2003 (available at

Employment disputes are increasingly subject to mediation rather than adjudication. This is so both with respect to the efforts of private employers to resolve employment-related claims that way rather than have them adjudicated, and the efforts of the U.S. Equal Employment Opportunity Commission (EEOC) to fulfill its mandate to prevent discrimination in the workplace through consensual mediation.

The confluence between public and private efforts in resolving employment disputes is particularly striking in light of the independent motives of the two sectors. Private employers seek efficient, businesslike management of risk, and government seeks vindication of the public interest in eradicating unlawful workplace practices. Yet both sectors look to the same technique— mediation— to accomplish those goals. And the goals are both accomplished by the same outcome— that is, private, consensual agreement facilitated by a neutral mediator. This article reviews the state of public and private employment alternative dispute resolution and suggests ways that both the EEOC and private employers can further enhance their goals by even more pervasive use of these approaches.

In 1995, the EEOC announced that it was "firmly committed to using alternative methods for resolving disputes in all of its activities, where appropriate and feasible. Used properly in appropriate circumstances, alternative dispute resolution (ADR) can provide faster, less expensive and contentious, and more productive results in eliminating workplace discrimination, as well as in Commission operations." See EEOC Notice 915.002, July 17, 1995.

During that same period, dozens of leading private-sector employers established internal employment dispute management programs that have been the subject of recent studies. See How Companies Manage Employment Disputes (CPR Institute 2002), available at See also David B. Lipsky, Ronald L. Seeber and Richard D. Fincher, Emerging Systems for Managing Workplace Conflict (Jossey-Bass 2003). Since that time, mediation has taken an increasingly prominent, and increasingly successful, place in the approaches used by the commission to fulfill its legislative mission.

These are not simply arbitration programs— they are multistepped administrative tools to identify, manage and resolve employment disputes on terms consensually agreed to by all parties. Indeed, one of the least-known and most compelling facts about these systems is that the companies that adopt and diligently administer them tend to resolve these disputes early and therefore seldom, if ever, engage in binding arbitration with their employees. The goals, motives, methods and results of the commission and the private employers are surprisingly similar. It's time that these similarities were recognized and acted upon.

The best place to start is by considering the business rationale for private employment dispute programs. Enforcement agencies enforce compliance with statutory requirements. By contrast, commercial rationality is the goal of most private-sector employment dispute resolution programs. Yet both private- and public-sector efforts find value in mediation and other consensual means of avoiding and resolving employment disputes. Private-sector employers use ADR systems because they are often commercially rational. For example, such programs have the following salutary effects:

They lend consistency (and therefore manageability) to the handling of employment workplace disputes.

They enhance employee confidence and morale.

They identify, and encourage early assessment of, conflicts in the workplace.

They permit assessment and improvement of company procedures or -supervisory skills.

They avoid employee misinterpretation when the employer offers to resolve a particular dispute.

In some situations, skilled management of conflict can save money. But cost savings do not always tell the whole story. Companies competing for skilled labor often place a premium on reducing turnover and enhancing employee morale, and they adopt employment dispute management systems in order to create a more satisfied and more stable work force. For similar competitive reasons, many companies seek to provide employees with such a program as a tangible funded benefit, an alternative to employees'
incurring the expense of hiring a lawyer when a problem arises at the workplace.

How to get started

To structure a private employment program, consider the following building blocks. The classic employment ADR system has three parts: internal efforts at resolution through discussion, negotiation, peer review, ombuds facilities, "open door" policies, toll-free telephone numbers or other advisory and facilitative techniques; intervention by a third, neutral party using nonadjudicative tools such as voluntary mediation or advisory merits evaluation; and adjudicative intervention in the form of final and binding

Many employers find that company culture, the sophistication of the human resources department, or other considerations counsel more varied approaches to managing workplace conflict. For example, United Parcel Service Inc. offers a five-step program, consisting of: "open door," in which employees, while encouraged to bring problems to their supervisor, are told "[you] have the right to bring your concerns to anyone you choose"; "facilitation," to ensure, on a regional manager, level that open-door options have been explored, to help to resolve the dispute internally and otherwise to facilitate satisfactory closure; "peer review," in which the employee and a company representative present both sides of the dispute to a panel of three employees— two selected by the complainant and one by the company— who then recommend a nonbinding solution; mediation, which is mandatory; and final and binding arbitration, which is optional.

Many companies have designed their unique approaches to these issues. UBS Financial Services Inc.'s "F.A.I.R." program offers four options, and the U.S. Postal Service offers a unique single-step mediation program. GE Corporate, a division of General Electric Co., "will reimburse the employee up to $2,500 for attorney's fees incurred for mediation, provided that a complete settlement of all claims is reached at mediation." Halliburton Co. provides a monetary benefit up to $2,500 per 12-month period for use by
employees in obtaining legal assistance. Shell Oil Co., too, offers a legal - assistance plan, featuring modest deductible and co-payment requirements to be applied for employees' legal costs.

Most of these programs call for the employer to pay all or almost all of the costs of the program, so that the employee has no greater financial hurdle to access the program than to access a courtroom. Once again, although such a feature is consistent with the requirements of the law in several of the federal circuits, it is more commonly included as a means of increasing employee trust, and therefore usage, of the program, resulting in resolution of conflicts before they ripen into disputes.

The EEOC reports that, in fiscal year 2003, the mediation program achieved a 69% settlement rate. See html. Nearly all disputes submitted to private systemic employment dispute resolution programs are resolved by agreement, prior to the arbitration stage
and usually prior to formal mediation. See How Companies Manage Employment Disputes, n.3 at 43, 69-70, 95 (CPR Inst. for Dispute Resolution 2002). There is abundant evidence that, the earlier and lower
down in management structure a dispute can be resolved, the faster, less expensive and more satisfactory is the outcome— to all parties concerned. And this experience more closely reflects employers' responses to social and economic forces, rather than purely legal or compliance concerns.

The EEOC's mediation program is triggered by the filing of a charge; the EEOC can't mediate a conflict that has not yet been submitted to it. Yet this happenstance places an unfortunate limitation on the commission's ability to advocate best practices in the workplace. The commission's professional
staff has substantial experience, insight, competence and commitment to offer in mediating conflict in the workplace, but it is brought to bear only upon filing a charge. Yet allowing conflict in the workplace to ripen into the point of filing an EEOC charge is, to many employers, a failure of management.

Reprinted with permission from the June 17 edition of the National Law Journal © 2004 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

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