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Resolving Disputes Through Employment Mediation

Few controversies are more damaging to a business than a dispute with an employee. In today’s environment, a single major employment dispute can result in the erosion of substantial assets because of legal fees and a potential jury award. A conflict with a key executive can devastate a well-established company. The task of handling the dispute can distract and unnerve an otherwise strong and efficient management team. This situation warrants a strategy that eliminates the possibility of disruption and distraction, and the financial and emotional cost to business.

Companies often embark on litigation in resolving employment disputes because management does not properly understand the consequence of such litigation and the psychological effect it may have on the business at hand. Once begun, it is difficult if not impossible to stop. Each step of the litigation process leads to the next. Companies often find themselves resolving cases at the courthouse door after economic, political and emotional costs have all been spent.

When a terminated or current employee makes a claim against his or her employer, it is generally in the interest of both parties to attempt to resolve the matter early through a procedure called mediation. In mediation, an experienced mediator meets with the parties to help them resolve their dispute. The involvement of a mediator greatly increases the chance of a resolution by helping the parties open communications to focus on their real interests in attempting to find a resolution that meets the needs of both sides. Mediation is a non-binding process. Neither party is required to accept any recommendation that the mediator might make for settlement. Any settlement and its terms are entirely subject to the parties’ agreement and the entire process is generally confidential.

SIDE NOTE: Employment law is one of the fastest developing areas of conflict. During the past 20 years, the courts have advanced principles of equal opportunity and fair employment. The delay, costs and disruption resulting from employment litigation have dramatically diminished the utility of employment litigation for resolving these disputes.

Disputes between a company and its employees can arise in several different contexts. An existing employee may contend that supervisory personnel have harassed them. An employee terminated or denied promotion may contend that such employment action constitutes discrimination based on race, color, religion, sex, national origin, age or disability. Lastly, a terminated employee may allege that he or she has been wrongfully terminated and that the termination was unfair or without good cause. Federal and state laws reflecting social intolerance for certain workplace conduct, and court decisions interpreting those laws, are redefining the manner in which a company must relate to its employees.

Because of the cost in terms of dollars, morale and disruption of management, procedures, including mediation are becoming more common in contracts of employment, personnel manuals and employee handbooks. In fact, we are seeing sophisticated employment policies that include an elaborate dispute resolution mechanism which may start with an internal complaint and investigation, peer review, non-binding mediation and then arbitration.

Several recent decisions of the United States Supreme Court have cautioned employers to ignore employee complaints at their own peril. Companies wishing to improve employment dispute resolution programs are required to implement policies requiring fair and reasonable investigation of complaints, and a dispute resolution mechanism involving mediation. For example, in two decisions issued by the United States Supreme Court last year, an employer can defend himself from sexual harassment and other discrimination complaints by demonstrating they have exercised reasonable care to prevent these forms of conduct and by showing that an employee unreasonably failed to take advantage of the companies’ programs.

An employer can be held liable if supervisors harass workers even if the employee does not report harassment and suffers no tangible loss. The employee does not have to prove the employer was negligent. The use of mediation is one way that a company’s efforts to address these complaints will be considered reasonable. In other words, the courts may find that it will be unreasonable for an employee who has a sexual harassment claim to refuse to use mediation mechanisms provided for in a company’s policies. So why is mediation such a useful tool in resolving employment disputes? The old saying that “perception is reality” is particularly true in employment disputes. For example, in a mediation involving a termination of numerous employees during downsizing, some employees may see their employment experience as an opportunity and be grateful for the skills they have gained. This type of employee will go out and get another job with the full support of his former employer. Another employee may see himself as getting screwed and resent the actions of his employer. His solution is to sue his employer and he only sees his employer as the source of his problems. Often, they cannot achieve settlements until they afford the employee the opportunity to recognize his own responsibility and to gage the accuracies of his own perception. Often, employees get so invested in their version of the facts they cannot get past the upset toward their employer.

On the employer’s side, many times a termination arises out of a situation that is not illegal per se, but badly handled. Often these bad facts form the basis of the plaintiff’s grievance. Employment disputes are often unique because the perceptions of men and women, or employer and employee often differ. A woman may perceive more behaviors as offensive than men do. Since the perception of what is appropriate conduct may differ, employment disputes based on gender perceptions are often more difficult to resolve.

Employment disputes grow out of relationships. There are many issues that need to be addressed other than just legal issues. Existing dispute resolution mechanisms did not address the full range of issues and conflicts that surface in these disputes. Each party in the relationship has particular needs. The employee may need a process that is expeditious and not financially costly. He or she may also need the ability to make a complaint without everyone in the company knowing about it. He or she may need to know that they are being listened to and taken seriously and will not be retaliated against. The last thing an employee wants to do when complaining about harassment or discrimination is to isolate themselves from his/her co-workers or supervisors.

On the other hand, employers often feel that discrimination and/or harassment complaints are unjustified and that they are “wrongly accused.” They often come into mediation with the attitude that they are being taken advantage of. As a result, they are unwilling to enter into any type of settlement. The mediation process allows them to vent these issues and to gradually see the dispute in a more impartial way, and to make good business decisions on how to resolve it. Mediation also allows the necessary expression of the emotional aspects of the conflict and provides a framework for creative problem solving. The parties are encouraged to consider creative remedies such as training, job modification, letters of reference, letters of apology, or new open channels of communication in resolving these complaints, especially when they involve currently employed co-workers.

Another problem with resolving employment disputes is that the devil is often in the details. Whereas an employment situation that may have been poorly handled does not amount to a legal wrong. In having mediated hundreds of employment disputes, I see time and time again that analysis of each and every legal detail of a claim makes it clearer to the complaining party that their grievance will not be addressed satisfactorily by the court and that they are far better served to work out a compromise settlement; that they really have no option in court.

When a terminated or current employee asserts a claim against an employer, it is frequently in the best interests of both sides to attempt to resolve the matter early through mediation. The mediation process gives the employee an opportunity to have their day in court and to vent emotions. A resolution is likely to emerge promptly. The resolution is likely to be more beneficial than one fashioned by the court or a jury. Mediation avoids lingering animosity. Mediation allows the parties to retain control over the outcome. Mediation requires far less in legal fees and other costs as compared to the expense of litigation. The mediation process and procedure is private and confidential, and confidentiality agreements can keep other employees from knowing about a particular settlement.

When a former or existing employee first asserts a claim, the employer often believes it is without merit and must be defended vigorously. Nevertheless, as trial nears the case is often settled, with management approval, but only after the costs and burdens of trial preparation have already been incurred.

Not only is mediation especially effective in dealing with the myriad of legal, factual and emotional issues that are present in a dispute. It also provides a cost effective and mutually satisfying way of negotiating what are otherwise difficult disputes.

SIDE NOTE: Problems encountered in employment mediations: failure of employee to take or recognize their own responsibility. The fact that there is a logical and reasonable explanation for the employment action taken although the employee does not know about and thus can only attribute the decision to an improper motive.

The fact that a termination may arise out of a situation that is not illegal per se but was badly handled. For example, employee may be terminated without prior warning because the employer did not have the nerve to the employee that he/she was not performing up to standards. From the employee’s perspective, his/her work was satisfactory and the employer pulled the rug out from under him/her.


Michael Roberts

Michael J. Roberts is a full-time professional mediator involved in resolving disputes throughout the United States. He has 36 years of major law firm experience as a senior litigation partner. Since 1985, Mike has served as a mediator and special master in more than 4,000 cases with aggregate settlements in excess… MORE >

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