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Designing an Effective Internal ADR Program: Key Insights and Strategies

Join Marian Exall, JD, SPHR, for an engaging breakout session at the NCMA World Congress 2006. This session focuses on the critical components of implementing a successful internal Alternative Dispute Resolution (ADR) program aimed at effectively resolving employment disputes. Learn about the legal basis of employment ADR, the importance of fairness, and how to navigate inherent power imbalances. Gain practical steps for program implementation, including the significance of employee involvement and clear communication. Discover strategies to enhance employee relations and reduce litigation costs.

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Designing an Effective Internal ADR Program: Key Insights and Strategies

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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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