Business Edge
Putting out business fires
By Eric L. Bloom

Disputes between employers and employees are inevitable. If you don't put out these fires, however, minor workplace disputes can escalate into major court battles. Over the past 30 years, changes in federal employment law--such as the enactment of the Americans with Disabilities Act of 1990 (ADA) and the passage of the Civil Rights Act of 1991--have fostered an increase in employment-related litigation.

The increasing chances of facing a dissatisfied employee or former employee in court is daunting to any employer--federal discrimination cases can take years to resolve. And because aspects of several new federal laws have not been tested in courts, there is less certainty about the outcome of cases. Juries have the ability to impose punitive sanctions in many instances and jury awards are difficult to predict.

A decade-old decision from a federal court in Texas illustrates the potential disaster of a jury trial. In Wilson vs. Monarch Paper Company, the employer began to implement a youth movement within its managerial ranks. Wilson, the plaintiff, was an executive with 30 years' experience whose employer reassigned his duties and refused to grant his request for a transfer. To force the plaintiff to quit, his manager assigned him work in a company warehouse and janitorial duties.

Wilson began suffering from respiratory problems from working conditions and stress from harassment. He filed an age discrimination suit and was awarded damages of $3.35 million, which was held up in appeals court.

The case demonstrates the harms that can be avoided by implementing an alternative dispute resolution (ADR) system to address employee grievances.

ADR describes a variety of extra-judicial dispute resolution processes. The use of ADR encourages the parties to consider creative solutions to disputes emphasizing communication between the parties rather than legal battles.

Negotiation. Negotiation involves an unmoderated discussion between the parties with the goal of setting a resolution. A workplace ADR policy might include an open-door policy that gives employees the chance to discuss complaints with their manager without fear of reprisal.

Fact finding. Fact finding involves enlisting a neutral person--either within the company or not--to investigate the complaint and develop findings on the dispute.

Peer review. A peer review involves the creation of a panel of employees with or without managers working together to resolve employment complaints.

Mediation. Mediation involves enlisting a neutral person trained in mediation methods to assist in negotiating an acceptable agreement. This process is non-binding, which means that it does not lead to an imposed solution.

Arbitration. Arbitration involves enlisting a neutral person--an arbitrator from outside the company--who decides how the complaint is to be resolved. The arbitrator's decision is usually binding for the employee and the employer.

Even if an employer implements an ADR process that involves each of these steps, it is likely that ADR will provide a faster, more efficient, and less expensive resolution to the dispute than litigation.

Proponents of ADR explain that the major advantages of the process include the following.

1. Speed. ADR can begin almost instantly. Even arbitration proceedings can be completed within a matter of months.

2. Economy. The speed with which ADR processes are handled means less attorneys' fees and costs.

3. Privacy. Arbitration hearings are private matters between the parties. The majority of legal proceedings, on the other hand, are matters of public record.

4. Expertise. Most arbitration agreements include provisions for the selection of a mutually accepted arbitrator. This allows the disputants to select a neutral arbitrator with specific experience or expertise.

5. Avoiding bad legal precedent. Arbitrators can base their decisions either on law or on their own principles. If a relevant court has created precedent that could undermine your case, you might be better off with an arbitrator.

6. Avoiding emotional juries. Egregious facts or unsympathetic defendants can often provoke an emotional jury response. An arbitrator may be more favorably disposed.

The inclusion of an arbitration agreement in an employment contract is a matter of consent. Parties can negotiate whether to include specific provisions in a contract.

The United States Supreme Court has supported arbitration agreements. You must, however, be careful that the agreement containing the clause is itself valid and that the details of the arbitration policies do not burden the employee, or unintentionally bind you in other areas.

Some employers choose to incorporate the arbitration provision in the business' policy manual. If you do not intend the policy manual to be a contract, have the employee sign an arbitration agreement separate from the policy manual.

Eric L. Bloom is an associate in the litigation department with Hangley, Aronchick, Segal, and Pudlin in Harrisburg, Pa. He is also a speaker at the Business Edge programs held in conjunction with the International Vision Expo Shows. He can be reached at ebloom@hangley.com

This article should only be viewed as a summary of the law and not a substitute for legal consultation. Please consult an attorney in your jurisdiction for advice in a particular case.