This article first appeared in InsideCounsel magazine on April 21st, 2015.
In recent years so-called "alternative" dispute resolution has been evolving significantly, offering parties many new options to address old potential concerns.
One of the most interesting domestic trends is the increasing — and increasingly flexible — use, by cutting edge companies, of innovative alternatives, including preventative methods, in the arena of employment relations.
Beyond mere mediation or arbitration, employers now are utilizing strategically a wide array of tools — such as integrated conflict management systems, online collaboration tools, employee hotlines, peer review, ombuds (whether subscribing to the Ombuds Standards of Practice or not), and coaching — all towards the end of preventing workplace disputes that might otherwise lead to lengthy, and costly, litigation. In late 2013, following broader 1997 and 2011 studies, the International Institute for Conflict Prevention and Resolution (CPR) working through its Employment Compendium Subcommittee, and Cornell University’s Scheinman Institute surveyed companies (pulled from the 2011 Fortune 1000 survey and CPR's corporate membership list) that had implemented particularly innovative and varied employee dispute resolution policies and practices. They reached out to attorneys and managers — not necessarily GC's — who had principal design and oversight responsibility for employer-employee disputes. Fifty-one companies ultimately provided complete survey responses. Of these respondents, 26 were in the corporate legal department, 13 in HR and 12 were ombuds or headed autonomous or semi-autonomous offices that managed the company’s ADR program. Ninety-nine companies were identified and 57 were interviewed. Other survey criteria included identifying companies that: used both interest-based and rights-based options—not only arbitration and mediation, but a whole range of techniques; used an ombudsman, or an automonous or semiautomonous office to coordinate their policies; and used some form of a conflict management system, either integrated or less comprehensive.
Cornell's Scheinman Institute Director, David B. Lipsky, provided the history from prior surveys and summarized the 2013 Survey results in Cutting Edge Advances in Resolving Workplace Disputes (CPR 2014), drawing various conclusions about trends in the resolution of employer-employee (and other) disputes, while other authors provide enhanced detail about various innovations.
In-house counsel seeking effective solutions to workplace disputes within their own companies may glean some ideas and/or inspiration from the following observed trends and conclusions, in some cases pulled contextually from all three surveys:
While there seems to be a divide, with nearly 40% of companies reporting avoiding the use of "alternative" dispute resolution methods, almost 50 percent of large U.S. corporations are now using alternative dispute resolution as their main vehicle for resolving workplace disputes.
- In fact, the 2013 survey revealed that within the prior three years, 77 percent of companies had used employment arbitration to resolve at least one dispute. In the 2011 survey, that number was only 36 percent, a marked increase. However, of the companies using arbitration, only 23% were using mandatory pre-dispute arbitration agreements, indicating a shift toward voluntary programs.
- Nearly 60 percent of the 2013 companies reported that all of their employees, from managers to line employees, were covered by dispute resolution policies.
Cutting edge companies are not necessarily limiting themselves to “best practices” as some authorities or textbooks might define them. Instead, they are shaping their programs’ scope and methods to meet their own needs and objectives. For example, one company reported using ADR policies to cover hourly employees in non-union facilities, but not in unionized facilities where presumably they were covered by collective bargaining agreements.
Contrary to the assumption that companies prefer mandatory, rights-based methods of resolving employee complaints, all three surveys revealed that a majority of large US companies actually prefer voluntary, interest-based dispute resolution procedures.
- In the 2013 survey, 45 percent of companies reported using voluntary procedures, with only 19 percent using entirely mandatory procedures.
- 25 percent reported using a mix--for example the approach described by one company, using voluntary procedures unless the employee elects to use arbitration, in which case the process becomes mandatory for the employer.
- Most companies using an integrated or less comprehensive conflict management system used voluntary arbitration as their last step. In some cases the result is no arbitrations as disputes are resolved at the latest at the mediation step.
Well beyond mere statutory claims, 69 percent of the companies surveyed in 2013 are using ADR to handle non statutory, "quality of (working) life" claims — such as those involving inter-personal disputes — that can be such a strong source of employee dissatisfaction and turnover within companies. Similarly, more than 25% are using ADR for “inter-unit disputes.” Anecdotal evidence also suggests that many companies are using ADR methods in executive compensation agreements.
The 2013 survey aimed to identify those individuals within a corporation most typically responsible for designing a company's dispute resolution policies and procedures; how the company communicated those policies to its workforce; and whether the company conducted formal assessments of its dispute resolution policies.
- Design of the policies is primarily managed by top managers. In the 2013 survey, nearly three-quarters of companies reported that corporate counsel fulfilled this role.
- In terms of communication, nearly three-quarters of 2013 survey respondents reported including ADR policies and procedures in their HR handbooks. More than 70 percent said they used face-to-face communications to inform their employees about these options, while nearly 90% used a website or intranet. Reflecting its increasingly important role in societal interactions, social media made an appearance at 7%.
- 24 percent of 2013 survey respondents reported conducting formal assessments of their ADR policies within the prior three years.
As Prof. Lipsky, summarized in Cutting Edge Advances in Resolving Workplace Disputes, "[T]he evolution of ADR policies and practices in U.S. corporations has not been a story of convergence around a common set of techniques and systems. Instead it has been a story of experimentation, variation and attempts by companies to tailor the ADR policies they use to their perceptions of the needs and interests of their organizations."
The ultimate goal for companies is not dispute resolution, per se, but conflict management such that traditional dispute resolution methods are no longer required. While inside counsel have a role in conflict management, these new and innovative programs recognize that HR and autonomous offices, as well as non-decision-making third parties such as mediators, coaches and ombuds, have an equally important place in achieving a litigation free workplace.