Alternative Dispute Resolution in a Public Sector

Abstract

Due to the extreme costs and time involved with litigating employee complaints and the bitterness and resentment felt between employees and management during the process, managers at the organizational level began looking for ways to improve the process and to resolve conflicts in a more efficient, effective, and amicable way. Although it is a relatively new concept to the public institutions, the means of employing alternative dispute resolution processes to settle complaints has been utilized for the mediation of international conflicts throughout history. This paper reviews the historical background of ADR and its origins as well as provides an in-depth analysis of ADR usage by federal employees and examines its efficiency.

Introduction

From ancient times to the 21st century, alternative dispute resolution processes have brought together disputing parties in search of solutions. Today, ADR is used to settle a variety of disputes in American institutions, including in the family, churches, schools, the workplace, government agencies, and the courts (Spangler, 2003). . For over a decade, the idea of settling employee-related complaints by means of Alternative Dispute Resolution (ADR) processes  has been embrace by management in United States (U.S.) public sector organizations (Bland, 2002).

Simply defined, ADR is a means of solving employee-initiated complaints using a myriad of alternative methods other than courtroom trials or litigation (Spangler, 2003). Processes may include an open door policy, third party investigations, fact-finding, peer reviews, mediation, arbitration, and a combination thereof (Spangler, 2003). Although it is a relatively new concept to the federal government, the means of employing alternative dispute resolution processes to settle complaints has been utilized for the mediation of international conflicts throughout history.

Resultant of numerous civil rights laws, including the Americans with Disabilities Act of 1990 and the Civil Rights Act of 1991, the awareness of workers to understand their civil rights, and societies tendency to be more litigious has led to significant increases in employment litigation and increased costs to employers over the past twenty years. In 2004 the EEOC received just under 80,000 new discrimination charges while the costs of settling a dispute has increased by almost 79% since the early 1990s (Garber & Salvatore, 2006).

In the federal sector, employment litigation has become the fastest growing area of federal civil litigation with a 2,166 % increase in the last 20 years while the costs of litigating employment lawsuits has exploded with average jury verdicts up over 100% in some states (Barnes & Glover, 2002). In response to the rapid growth in employment discrimination claims, the negative publicity associated with high profile courtroom litigation, and the high costs resultant from such claims, companies are increasingly establishing alternative methods to resolve complaints in place of traditional courtroom litigation (Garber & Salvatore, 2006).

With the costs and time associated with litigating employee EEO complaints skyrocketing organizations began looking for ways to resolve employee complaints in a more efficient and effective manner. Since FY 2000 United States federal government and EEOC regulations have required all federal agencies to establish or make available an ADR program at both the pre-complaint and formal complaint stages of the EEO process to more efficiently and effectively settle employee EEO complaints (EEOC, 2004, ADR Report: Part 1, Introduction Section, ¶ 4).

Alternative Dispute Resolution

ADR is a process utilized to settle disputes between parties in lieu of traditional litigation or lengthy court proceedings. Most ADR options include a disinterested third party trained in the process of acting as a negotiator between disputing parties allowing participants to arrive at a mutually agreed upon settlement. Spangler (2003, ¶ 1) explains, "The use of ADR processes usually results in the resolution of disputes in a way that is less formal and often more consensual than is done in the courts." Fazzi (2005) found,

Negotiation is the root of all ADR forms. At its core, two people simply talk about a problem and attempt to reach a resolution both can accept. In this sense, it can be said that ADR started at the dawn of time. (¶ 6)

Some of the most common forms of ADR processes include third party investigations, mediation, negotiation, arbitration, fact-finding, ombudsman, and peer review. Though it may be a voluntary option for some organizations employers often mandate the use of ADR as a precondition to employment for new hires or continued employment for current employees. At times, the use of ADR may be mandated by the court, requiring that disputants attempt to resolve issues through ADR processes before litigating the dispute more formally in court.

The intended purpose of utilizing ADR programs and processes is to provide employees and employers with a more efficient and effective means of settling employee-initiated complaints outside the courtroom. The EEOC (2005) points out that as litigating EEO complaints becomes increasingly more costly, adversarial, and lengthy, the government has promoted the expanded use of ADR programs as a means of settling disputes in a less formal manner rather than litigate disputes in the courtroom.

Alternative Dispute Resolution vs. Traditional Litigation

Much of the literature supports the idea that usage of ADR programs in the workplace has resulted in improved efficiency and effectiveness in resolving employee-initiated EO complaints when compared to traditional administrative and litigation processes. Senger (2003) supported this theory when he stated, "Used properly, ADR can provide fast and cost-effective results while at the same time improve workplace communication and morale" (p. 7). However, there are growing arguments by professionals in the field that disagree with the purported successful use of ADR processes and argue that dissimilar results have been realized in both the public and private sectors of the workplace.

Janove and Parauda (2004), and the EEOC (2004, 2003) have all indicated that the utilization of ADR methods are a continuously developing and evolving process that benefits both employee and employer, by decreasing costs and time involved resolving disputes while promoting improved future relations between disputants. Fracaro (2002) pointed out that by allowing employees more power over the decisions that affect them, they in turn are better motivated, more productive, and less apt to litigate problems that arise in the workplace.

Whereas traditional litigation requires that the parties involved in a dispute adhere to the decision adjudicated by a judge, ADR processes allow both parties to derive a mutually beneficial agreement in settling their differences. Patterson (1988) reiterated the need for ADR processes as a means for modern organizations to reduce the time and costs associated with traditional litigation. Specifically, through ADR processes, she highlighted the importance of the ombudsman in acting as a fair and impartial element in the mediation and arbitration process and stresses the necessity for objectivity when negotiating employee and employer related disputes.

Not everyone agrees with this concept, however, and in fact, some feel that ADR processes do not provide a fair and impartial arena for workers to resolve employee-initiated complaints. Spangler (2003) asserted,

Some critics have concerns about the legitimacy of ADR outcomes, charging that ADR provides "second-class justice." It is argued that people who cannot afford to go to court are those most likely to use ADR procedures. As a result, these people are less likely to truly "win" a case because of the cooperative nature of ADR. (¶ 8)

Still others feel that ADR is just as costly as litigating complaints and that in the end ADR provides no better forum for settling disputes than the courtroom. Still others argue that settlements derived from utilizing ADR programs favor the employer citing that employees may feel pressure to settle for less than had they brought the complaint to court.

Hirshman (2001) stated that ADR programs are skewed in favor of the employer and that because of the U.S. Supreme Courts decision to reinforce an employer's right to require mandatory arbitration of its workers, arbitration may be seen as adversarial when employees are forced to submit to the process. In light of these and other findings by professionals in the field, companies are reevaluating their ADR programs and questioning if alternative means of settling disputes are really providing the cost and time savings promised by proponents of the process. Closky (2002) observed, "Many organizations are finding that arbitration may be the wrong cure for the wrong ills and the side effects can be costly" (¶ 21).

Other issues arise when employees are required to sign mandatory arbitration agreements as a precondition to employment or continued employment with an organization, or when there is little or no confidence in the selected arbitrators or third party neutrals by employees. Successful arbitration depends on both sides perceiving their arbitrator as fair and neutral (Salvatore, 2002) and any effort to compel employees to utilize a certain form of ADR is wrong (Fitzpatrick, 1994). As a result, many employers seem hesitant to implement new ideas and processes within their organizations for fear of losing or chasing away good employees. Shultz (2005) cautioned,

While some employment arbitrators may be more knowledgeable and less fickle than juries, and while the cost of arbitration may be lower than that of a court trial, arbitration is not necessarily all that it has been cracked up to be. In fact, some experts and practitioners believe that mandatory arbitration encourages frivolous claims and, in the long run, does not save money at all. (p.1)

Spangler (2003) articulated several other concerns he had regarding the privacy of ADR outcomes. Because these outcomes are private and not reviewed or recorded in the public record, they are not exposed to any public or legal scrutiny. He goes on to state that although the use of ADR may encourage compromise and quick settlements between parties, compromise may not necessarily have been in the disputants best interests.

History and Background of Alternative Dispute Resolution

Some type of informal process or means to settle disputes between disputing parties has always existed. From the childhood disputes in the sandlot to modern times, people have incorporated some means of settling disagreement in court. Both Barrett and Barrett (2004) and Fazzi (2005) found historical evidence to support that recorded negotiations began sometime around 1400 BC with the Amarna system of International relations.

There is additional evidence that ancient peoples of many different nations and cultures utilized some type of ADR to settle a variety of disagreements all throughout history including trade, matters of diplomacy between nations, peace treaties, and a myriad of other disputes (Barrett and Barrett, 2004).

In the late 19th century, in response to the ongoing disputes between labor and management, Congress passed legislation aimed at settling collective bargaining disputes. Later the Board of Mediation and Conciliation and the Federal Mediation and Conciliation Service were created to assist with mediating railway and other labor disputes. In 1913, the Newlands Act was created to assist in solving collective bargaining disputes through negotiation and arbitration agreements. Mediation was not conceived as an alternative to adjudication. It was an alternative to strikes and ensuing economic disruption, which occurred when unassisted settlement negotiations failed (Superior Court of Delaware, n.d.).

While mediation goes back thousands of years (Barrett and Barrett, 2004, p.1) the movement toward ADR in the United States began after World War I, and reached its first milestone with the passage of the first modern arbitration statute in New York in the mid 1920s (Lectric Law Library, n.d., ¶ 27). As a result, the American Arbitration Society of America (AAA) was formed in 1926 (American Arbitration Association, 2008).

Soon many other organizations, both pubic and private, were formed to assist in solving conflict between labor and management including the National Mediation Board (NMB) in 1934, and the National Labor Relations Board (NLRB) in 1935. Members of the NMB mainly mediated conflict between the airline and railway industries while members of the NLRB, were designated by Congress to mediate employee-initiated disputes in the private sector (Barrett and Barrett, 2004).

As the use and utilization of ADR processes have grown in the United States, Spangler (2003, ¶ 3) pointed out that the introduction of new laws protecting individual rights, as well as less tolerance for discrimination and injustice, has led more people to file lawsuits in order to settle conflicts. After the enactment of the Civil Rights Act of 1964, individuals had a legal forum to bring disputes in response to discrimination in the workplace based upon race, sex, or national origin (Barrett and Barrett, 2004).

These circumstances as well as society's tendency to be more litigious led to the EEOC's creation of a mediation program in 1991. After an initial test period and meeting with success at each of the four predetermined test field office locations, it was determined that ADR was a workable solution to traditional means of settling employee-initiated EEO disputes. Then in "1995, EEOC adopted its policy statement on ADR setting forth certain core principles for an ADR program. Following development of the program's operational framework in 1998, and receipt of start-up funding in its FY 1999 appropriation, EEOC's ADR mediation program was fully implemented in April 1999" (EEOC, 2003, ¶1).

Identifying a Need for Change

During the 1960s, President John F. Kennedy recognized the need to enact civil rights legislation in order to settle the civil strife created by racial discrimination and segregation in almost every segment of American society, including the workplace and employment practices. After Kennedy's assassination in 1963, President Lyndon B. Johnson, in the name of John F. Kennedy, championed the passage of a civil rights bill intended to eliminate the racial discrimination that was tearing the country apart. Upon passage by the House and the Senate, President Johnson signed the Civil Rights Act of 1964 into law July 2, 1964 (Barrett and Barrett, 2004).

The new law prohibited discrimination based on race, color, sex, religion, or national origin and paved the way for the establishment of the EEOC as a watchdog organization one year later to enforce the law and to counter discrimination in the workplace and in employment practices. Unfortunately, the newly formed organization was provided with little or no enforcement jurisdiction. "Because of its lack of enforcement powers, most civil rights groups viewed the Commission as a 'toothless tiger' (EEOC, n.d., ¶ 3)".

The five-member, bipartisan commission was only responsible for receiving and investigating complaints of discrimination and for forwarding those complaints to the Department of Justice for resolution. In the first year of its existence, the newly formed EEOC received 8,852 complaints (EEOC, n.d., ¶ 1). Despite its limited authority and power, members of the commission were very effective at identifying and assisting aggrieved individuals in settling employee-initiated EEO complaints. Through conciliations and by assisting private litigants in federal court through its robust amicus curiae program (in which EEOC filed "friend of the court" briefs interpreting the law), EEOC obtained redress for thousands of individual workers who had been victims of discrimination (EEOC, n.d., ¶ 3).

The Equal Employment Opportunity Act enacted by Congress in 1972, provided for increased authority in the area of employment discrimination and extended protection to many different classes of individuals in an effort to reduce or eliminate discriminatory practices in the workplace. Major provisions of the Act included ("The 1970s: The Toothless Tiger" Gets its Teeth," n.d):

1.         The EEOC received litigation authority to sue nongovernmental respondents' employers unions, and employment agencies.

2.         The EEOC could file pattern or practice lawsuits.

3.         Title VII coverage was expanded to include the Federal Government and state and local governments, as well as elementary, secondary, and higher educational institutions.

4.         The number of employees needed for Title VII coverage over employers was reduced from 25 to15.

5.         The Equal Employment Opportunity Coordinating Council was established, composed of EEOC, the Departments of Justice and Labor, the Civil Service Commission, and the Civil Rights Commission to 'maximize effort, promote efficiency, and eliminate conflict, competition, duplication and inconsistency' among the various federal programs (¶ 2).

Resultant of several important cases brought before the Supreme Court of the United States, the enforcement authority of regulators at the EEOC continued to expand and support the commission's general characterization of discrimination by adding protections for women, immigrants, older workers, and minorities. In an effort to streamline and simplify the process, members of the Carter administration consolidated many federal EEO programs through executive order, and in 1978, Congress passed the Uniform Guidelines on Employee Selection Procedures (UGESEP) (Barrett and Barrett, 2004).

With the cooperation of the Department of Labor, Department of Justice, and other federal agencies, overseers at the EEOC continued to expand the organizations role in education and enforcement of employment and discrimination law and in fulfilling its mission of addressing every individual complaint of discrimination in the workplace. Throughout the 1980s, officials from the EEOC continued to oversee and expand employment discrimination protection for every class of minority worker (EEOC, 2003).

During the early 1990s the commissioner of the EEOC continued to expand its jurisdiction and authority as Congress passed several other important acts and laws aimed at further eliminating discrimination in the workplace including the Americans with Disabilities Act (ADA), the Civil Rights Act of 1991, and the Older Workers Benefit Protection Act. (Barrett and Barrett, 2004). These newly adopted federal programs included many important enhanced protections for a variety of oppressed individuals in an ongoing effort to eliminate workplace discrimination and provide for fair and impartial employment practices.

The Civil Rights Act of 1991, passed in November of that same year, provided workers with the right to demand jury trials and recover compensatory and punitive damages under Title VII of the Act in lawsuits involving intentional discrimination (Barrett and Barrett, 2004).

Throughout its history, members of the EEOC have taken on the responsibility of educating the public about employment discrimination and encouraged voluntary compliance of discrimination laws by employers while continuously increasing its enforcement role. Over the years, this highly effective organization has evolved to meet the challenges presented by inequality in the workplace by providing assistance to businesses and civil rights groups through various methods including the hosting of seminars and conferences aimed at both educating and promoting affirmative action and equal employment practices (EEOC, 2003).

EEOC Complaint Processing by Federal Agencies

Because of the passage of the Civil Rights Act of 1964, the EEOC (2005) was created to eradicate discrimination in the workplace. Since 1964, the EEOC has grown in both its area of responsibility and enforcement authority and today is the federal governments "lead enforcement agency in the area of workplace discrimination" ("Pre-1965," n.d. ¶ 7.) EEOC regulations require all federal agencies to utilize ADR programs and encourage voluntary settlement of EEO complaints as expeditiously as possible. After FY 2000, the commissioner of the EEOC required every agency within the federal government to implement and make ADR available for employees to settle EEO complaints. In addition, the commissioner of the EEOC (2005) has made ADR central to its five-point plan to improve the process asserting:

Agencies have the discretion to determine when an EEO matter is appropriate for ADR. They may establish written procedures to identify when ADR will be offered, or they may decide to offer ADR on a case-by-case basis. Agencies may not decline to offer ADR to particular cases solely because of the basis involved (i.e., race, color, religion, national origin, sex, age, disability, or retaliation). ("Executive Summary, section A, ¶ 1)

Filing a complaint is a three-step process: 1). Employees have up to 45 days after the alleged discriminatory act took place to contact an EEO counselor; 2). The individual can choose either counseling or accept ADR processes; 3). If either process does not end in settlement of the complaint, the employee may file an official complaint with the offending agency (Facts about Federal Sector EEOC Processing Regulations, 2003, April 23, Filing a Complaint with a Federal Agency, ¶ 2).

If the agency staff accepts the complaint, an investigation is conducted and a copy of the findings provided to the complainant. If the findings by the investigation are not acceptable to the employee the individual may request a hearing or request a final agency decision, appeal to the EEOC, or revert to more formal and traditional resolution processes by filing an action in federal court. All investigations must be complete within 180 days in order to meet EEOC timeliness guidelines.

As the EEO complaint process has become increasingly more costly, adversarial, and lengthy, the commissioner of the EEOC has encouraged agencies to promote and expand the use of ADR as a means of avoiding more formal dispute resolution processes (EEOC Annual Report on the Federal Work Force, 2004). Current EEOC regulations require that all federal agencies to establish or make available to employees an ADR program at both the pre-complaint and formal complaint stages of the EEO process ("Executive Summary," 2005, Introduction Section, ¶ 4.)

The EEOC Five-Point Plan

In order to fulfill the EEOC mission of eliminating discrimination in the workplace, members of the commission have initiated a five-point plan. Major components of the plan include:

1.         Promote and expand the use of mediation and other types of ADR as a means of resolving EEO disputes.

2.         Promote proactive prevention of discrimination in the workplace through education and training.

3.         Provide proficient resolution to employee-initiated complaints.

4.         Provide strategic enforcement and litigation.

5.         Provide policy guidance for establishing EEOC as a model workplace EEOC, 2003).

Volunteer vs. Mandatory ADR Usage

A strong proponent for voluntarism, Patterson (1988) recommended the utilization of ADR processes as an alternative, not a replacement for litigation. Closky (2002) supported this notion also when he suggested, "rather than require the use of mandatory ADR programs, a proper blend of interest and rights based options often resolve most disputes before the need for the expense of arbitration or litigation" (Conclusion Section, ¶ 1). This idea is directly commensurate with the implementation and administration of current federal ADR programs that allow complainants to voluntarily enter into a two-stage process including a pre-complainant stage and then if necessary, a formal complaint stage, before filing a civil action in federal court.

Challenges and Controversies

As the EEO complaint process has become increasingly more costly, adversarial, and lengthy, EEOC has encouraged agencies to promote and expand the use of ADR as a means of avoiding more formal dispute resolution processes (EEOC, 2004b). Those who avidly support ADR and the process claim that fast and timely resolution of complaints, reduced costs, and improved relationships are mutually beneficial for both organizations as well as employees. In their annual report, members of the EEOC (2004b) claim that "used property, ADR can provide fast and cost-effective results while at the same time improve workplace communication and morale" (Section B, ¶ 2). This coupled with the fact that our society has become more litigious (Wildman, 2002) has rendered traditional means of resolving disputes both cumbersome and ineffective.

Today, many organizations are seeking a fair, impartial, and expeditious means of settling employee-initiated disputes that parsimoniously bring cases to resolution. Attorney Harold Wildman (2002) noted, "there is increasing sentiment to recommend the adoption of ADR in some format, and its popularity is bound to grow as costs skyrocket" (Conclusion Section, ¶1). In 1996, the Administrative Dispute Resolution Act (ADRA) required each federal agency to adopt and promote the use of ADR. Since FY 2000, EEOC regulations have required all federal agencies to establish or make available an ADR program during both the pre-complaint and formal complaint stages of the EEO process ("Executive Summary," 2005, Introduction Section, ¶ 4.)

However, not everyone believes that ADR is the panacea to costly, time consuming, and ineffective litigation as it is touted to be by supporters of the process. Hirshman (2001), Salvatore (2002) and Fitzpatrick (1994), all have concerns regarding the fairness and accountability of judgments handed down because decisions may not be favorable for employees and actually skewed in favor of the employer. Attorney/mediator Adair M. Buckner (2006) noted, "The drawback to mediation for the plaintiff is that the plaintiff employee is not likely to receive as large a recovery as he or she would have received had she or he prevailed at trial" (¶ 8).

In a study conducted by the National Policy Consensus Center (2005), a diverse work group made up of professionals from around the country, met to discuss barriers to the implementation and use of ADR programs. The working group identified a number of barriers to the greater use of ADR including:

1.         Lack of information and negative perceptions: Includes general information barriers, perceptions that ADR is inappropriate for public use, problems with systems design, and lack of cost-benefit information.

2.         Budget and procurement problems including lack of budget and procurement procedures.

3.         The Identification and qualifying of neutrals including credentialing and proper training.

4.         Organizational and bureaucratic impediments including organizational culture and resistance to change, lack of internal/interagency coordination among  government entities, lack of incentives and disincentives, lack of a persuasive leader and the lack of support at highest and mid levels.

5.         Legal issues, uncertainties and lack of support includes uncertainty about authority to use, and assorted legal issues, legal community (National Policy Consensus Center, Barriers to greater use of ADR processes, H 3)

In reviewing their findings, the Policy Consensus Initiative's (PCI) working group members identified many important barriers to implementing and managing a successful ADR program. Chief among them appear to be the negative perceptions and lack of knowledge about the programs on the part of both employers and employees. Secondly, there appears to be a myriad of legal implications that may impede the process including questions surrounding the validity and enforceability of decisions and questions as to who has overall responsibility for the program. Finally, resistance to change, budget considerations, and the lack of qualifying neutrals all play a part in whether an ADR program is successful or not.

Many other professionals in the field have noted that the use of ADR is not always the answer to litigating employee-initiated disputes in court including. Attorney Harold Wildman (2002) who noted several other potential disadvantages to the use of ADR when he stated:

On the other hand, ADR does not provide the same procedural safeguards and may limit potential defense strategies. Furthermore, if ADR is more "user-friendly," employees may be inclined to file complaints in greater numbers. The issue of quality decision making also has arisen as some fear that arbitrators may lack knowledge regarding sophisticated legal theories, business concerns, etc., which will effect the accuracy of their decisions. (Weighing advantages and disadvantages section, ¶ 10)

Buckner (2006) asserted although it may be clear that, "the use of ADR in the employment context is here to stay, what may not be so clear is whether or not the process is working as well as some claim (Conclusion section IV, ¶ 1).

Summary and Conclusion

The trend to streamline, downsize and reorganize continues as the federal government searches for ways to cut costs while increasing productivity. In attempts to do more with less the costs of litigating employee EEO complaints continues to rise. Many cases cost the government enormous amounts of money to settle, while others take years to resolve. In an attempt to simplify the process and reduce the time and costs associated with traditional litigation resolution procedures, the government began to look for alternative ways to resolve disputes between employees and management.

Some of the more popular ADR processes include arbitration, mediation, negotiation, mini-trials, and peer reviews. The idea has gained widespread acceptance in both the public and private sectors. Organizations tired of overcrowded courts and soaring legal costs have embraced ADR, and it has quickly become "mainstream" not only in the federal sector, but also within private organizations such as General Mills, IBM, and Citi Bank. As ADR processes have become more popular in both government and private industry, some critics of the process have expressed concern that ADR unfairly favors management. Others feel that arbitrators may not be adequately qualified and may have too much power, especially in cases where their decisions are final and enforceable.

Much of the literature reviewed concerning the use of ADR programs to settle employee EEO disputes advocate the use of ADR processes. The prevalent theory concerning ADR usage in the workplace appears to be an overriding sense that ADR is the answer to the inefficiency and ineffectiveness associated with traditional litigation processes. However, after examining several studies, there are indicators that ADR may not be the panacea for settling employee-related disputes as initially predicted. Some researchers concur that there may be serious problems regarding the use of ADR processes as a replacement for courtroom litigation to settle employee grievances in the workplace.

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