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Breakout Session # 104 Marian Exall, JD, SPHR Tuesday, April 11 11.00 am to 12.00 pm

Critical Issues in Designing an Effective Internal ADR Program. Breakout Session # 104 Marian Exall, JD, SPHR Tuesday, April 11 11.00 am to 12.00 pm. What is an internal ADR program?. A multi-option process for resolving employment disputes internally Not:

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Breakout Session # 104 Marian Exall, JD, SPHR Tuesday, April 11 11.00 am to 12.00 pm

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  1. Critical Issues in Designing an Effective Internal ADR Program Breakout Session # 104 Marian Exall, JD, SPHR Tuesday, April 11 11.00 am to 12.00 pm NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  2. What is an internal ADR program? • A multi-option process for resolving employment disputes internally • Not: • An arbitration clause in an employment contract • Collective bargaining agreement grievance process NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  3. Why do you want an ADR program? • To avoid the costs of employment litigation: - Attorneys’ fees (possibly including Plaintiff’s attorneys’ fees) - Judgment - Settlement • To avoid the non-monetary costs: -Time - Damage to employee morale - Damage to the company’s reputation Faster – Cheaper – No Jury - Private NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  4. The legal basis for employment ADR • Gilmer v. Johnson-Lane (US Supreme Court,1991) and following cases authorize mandatory employment ADR if: - availability of competent, conscientious and impartial arbitrators - opportunity to conduct discovery - written arbitration awards - access to the same relief as in court - EEOC not precluded from litigating - employer bears costs NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  5. The Fairness Issue Creates Tension • Inherent imbalance of power between the employer and the employee requires due process safeguards beyond those normally required for the formation of a contract. • Due process safeguards make the ADR process longer and more expensive – more like litigation. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  6. Rules to Resolve the Tension • 1995 Due Process Protocol led to AAA’s National Rules for the Resolution of Employment Disputes • Strict deadlines for answering the demand, management conference, issuance of award • Arbitrator discretion over conduct of discovery and admission of evidence NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  7. SDNY Trials: Claimants win 33.6% Median damages $95,554 Average damages $377,030 Median attorney fee award $69,388 Average attorney fee award $149,746 Median time to decision 25 months AAA Arbitrations: Claimants win 43% Median damages $44,855 Average damages $172,690 Median attorney fee award $14,173 Average attorney fee award $42,047 Median time to decision 8 months Does Employment ADR work?(Delikat/Kleiner study of Securities Industry Arbitrations and Hill study “Due Process at Low Cost – AAA Employment Arbitrations”) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  8. Implementing an Employment ADR Program • Step 1 – get Human Resources on Board • Step 2 – involve employees • Step 3 – draft the program • Step 4 – give clear notice to employees • Step 5 – training • Step 6 – measure and evaluate NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  9. Drafting the Program • Start from the bottom up • Improve existing complaint resolution channels • Adopt alternative internal mechanisms (ombuds, peer review, mediation) • Consider external mechanisms (mediation, arbitration) • Determine what issues will be covered NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  10. Arbitration Agreement Alternatives • Pre-dispute, non-binding • Pre-dispute, final and binding • Post-dispute, non-binding • Post-dispute, final and binding NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

  11. The UPS Program Five steps: • Open door – required • Facilitation by Regional ERM – required • Peer review – optional • External Mediation – required for arbitration • Arbitration (AAA Rules) – optional, binding Results: • Litigation rates declined • EEOC charges decreased • Employee relations enhanced NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

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