Michael Moore, Esq. Director McKenzie HR Solutions Printer Friendly Version

Why Alternative Dispute Resolution?

“ADR” means alternative dispute resolution. The concept of diverting legal disputes from the courtroom to other forms of resolution has been around a long time. The granddaddy organization of ADR is, of course, the American Arbitration Association. Long used by corporations to conclude disputes about contract issues, in the last ten years more and more employers have adopted ADR as their exclusive vehicle for dealing with employee legal claims. Why is that? And why should you consider it for your practice?

As those of you who have been following these articles already know, we advocate an entirely new employment relations concept—one that replaces punitive measures in dealing with employee performance and behavior challenges with consensual interaction and responsibility. Our system not only builds employee confidence in what treatment to expect from a practice but, if properly followed, also creates a document trail that shows a practice in its true form of concern for the employee.

But even with our system, and even with it being consistently followed with the assistance of our Solution Center support, the possibility exists that one employee will not get the message. Unfortunately, there are always lawyers out there who might take a flyer at an employer, hoping for a quick settlement of a claim. But once a lawsuit is filed, it is much like a freight train—very hard to bring to a stop. And the longer a case goes, the higher a doctor’s legal bills climb. It is an unfortunate truth today that even with a successful defense of a suit, a practice will incur easily $25,000 in fees and costs (and more likely twice or three times that amount).

So how could ADR make this admittedly undesirable—almost unthinkable—process less costly and time-consuming? Let’s look at the typical policy.

First, the agreement to submit all claims to ADR is a contract. You can document the agreement by inclusion of a provision in an application, or in a separate document. An explanation of the process is accompanied by the employee’s signature acknowledging receipt and acceptance. The employee’s continued employment is the consideration that makes the promise enforceable by either side.

Most ADR policies include two phases: mediation and arbitration. Mediation simply means that the parties choose a neutral individual to hear the grievance and try to bring it to a close by settlement. Failing that, the parties have the option of demanding arbitration. As the cases say, committing the dispute to arbitration “ousts the courts of jurisdiction.” The employee may not file suit. The claim is ordinarily submitted to a single arbitrator chosen by the parties from a panel of lawyers.

Employment arbitration disputes have been the subject of many cases in the last decade, and the court decisions have created the parameters of an enforceable agreement. Following those decisions, ADR organizations like the AAA have developed specific rules for arbitration of these kinds of claims.

The advantages of arbitration for the employer are these:

• The arbitrator’s decision is not subject to appeal, except in extraordinary circumstances.
• The amount of “discovery”—requests for production of documents, sworn depositions, etc.—available to the employee is dramatically reduced from that which could be had in a court. This means that not only is there a substantial savings of money but also less likelihood the plaintiff might uncover documents or information that could be detrimental to the defense.
• The time from filing a claim until resolution is usually months—compared to years for a court case.

Having a case hang around for years produces great anxiety in everyone involved. It is much better for emotional well-being and business well-being to have such claims resolved at the earliest stage possible.

The primary downside of the arbitration process is that the courts have ruled that the employer cannot demand the employee pay proportionate costs of administration and the hearing officer fees. Hence, you the doctor will pay those fees, save for a small initial fee paid by the employee when the claim is filed. Our opinion, however, is that these expenses are more than offset by the savings in defense and discovery costs that would accrue if the case were in court.

The one caveat on ADR is that the courts continue to refine what is and is not an enforceable agreement. Here are two examples of decisions that have come down just this last week. In the first, a California court of appeals held an employment ADR policy void because the employer’s policy contained very specific limitations on discovery, allowing only a single deposition, for example. The court held that this policy so limited the due process that it could not be enforced. On the East coast, however, the United States Court of Appeals for the Fourth Circuit upheld an employment arbitration policy against an employee who could not speak or understand written English. The court held that the employee’s failure to have the document translated, or have someone read it to him, was negligence that did not excuse him for performance of the promise evidenced by his signature.

Another consideration is that these agreements are increasingly coming under scrutiny by Congress. There is a possibility that Congress may outlaw all employment ADR agreements sometime in the next term. However, powerful forces—not the least of which is the AAA itself—are pushing against such a sweeping change.

When I have a potential client come into my office today almost the first question out of my mouth is whether there is an ADR agreement. If the answer is yes, the chances are great that I will not accept that case. We hate the limitations imposed by the rules, because we know that no matter what anyone says about ADR making no difference in justice, the opposite is true. ADR tilts the playing field dramatically in favor of the employer.

In order to make sure you have the right agreement and that your agreement is organic—i.e., can change to conform to the latest court cases—you should not do this on your own. Have good advice and support. We can provide it.

Mike Moore is ranked among the best in employment law and named one of the top 10 lawyers in Ohio. As Director of McKenzie's HRSolutions, Mike is the creator of the Employment Policy and Handbook, geared to providing dentists who are unsophisticated in the legal arena with a step-by-step policy manual.

Click here to hear Mike present “7 Elements of an Effective Employment Policy.”
Email Mike at mike@thedentistsnetwork.net.

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