Developing an ADR program Featured

10:35am EDT September 20, 2006
The number of legal disputes between employers and employees is increasing, which places new demands on both parties to resolve them quickly, efficiently and fairly. A number of internal binding and nonbinding methods are available to employers to resolve employment disputes, including arbitration, mediation, and peer review programs.

Sometimes the dispute resolution process requires the inclusion of attorneys. Employers, especially those in medium- to large-sized companies, should be prepared to manage employee dispute situations before the situations manage them.

Smart Business spoke with Thomas E. Reddin, a partner at Godwin Pappas Langley Ronquillo LLP, to learn how employers can manage their employee disputes fairly, in a timely, cost-effective manner.

What is causing the rising number of employment-related disputes?
The reasons vary. Among them are the changing dynamics of the workplace, new laws that give employees more rights, a growing sophistication among employees regarding those laws, a multigenerational work force, the portability of key personnel, and decreased union influence. Some of the disputes that management and labor union representatives used to resolve now require other methods, which makes it advisable for employers to implement Alternative Dispute Resolution (ADR) programs.

How do ADR programs benefit employers?
Significant benefits include prevention of problems before they start and cost savings — not necessarily measured entirely in dollars. If a legal dispute with an employee goes to trial, the process takes key company personnel away from their routine duties, which can be costly, especially since litigation can be quite lengthy.

ADR methods can significantly decrease the length of time needed to resolve disputes. Perhaps most importantly, a properly designed, communicated and utilized system makes a statement that management cares about its employees and will treat them fairly.

What should a company look at when choosing the dispute remedy?
One factor is the company’s culture.

A second is a careful analysis of what the company wants to accomplish. For example, does it want to open the lines of communication and give employees various avenues to address a complaint, or simply serve as a mechanism to resolve disputes after they have developed?

Another consideration is the sophistication of the company’s Human Resources Department. Some companies are well prepared to deal with employee disputes based on previous experience, the level of training their employees have received in resolving them, and the programs they may already have in place.

Naturally, cost enters the selection process. Employers must look at the cost of litigation versus arbitration, mediation or peer review. Generally, litigation is more costly in terms of time and money, but implementing an ADR mechanism may result in an overall greater number of complaints. Companies are well advised to perform careful cost/benefit analyses when weighing their ADR options.

Finally, the alternatives to litigation have their own merits. Does the employer want a legally binding resolution involving a neutral third party, as with arbitration? Or is the preference to try and resolve the dispute inhouse, via a peer review board, which might be more suitable in company cultures that make it more amenable?

At what point in the legal dispute resolution process should attorneys be involved?
Most companies would probably tell you that the ideal situation would be to keep lawyers out of it altogether. That is not always possible — or practical. In cases where their participation is advisable, it is best to get them involved as early as possible.

Attorneys can help draft and implement effective workplace policies, including ADR and arbitration programs; provide behind-the-scenes counseling and guidance during the dispute resolution process; and frame issues correctly.

Employers that choose peer review boards to resolve disputes should make sure the panel members are trained and willing to maintain confidentiality regarding the parties involved and outcomes. Attorneys can provide peer review board training.

How can companies forestall disputes with their employees in order to reduce litigation costs?
Two keys are increased communications and training programs. A significant percentage of employee disputes are the result of front-line supervisors’ actions. Companies that implement and monitor sophisticated communications and training programs to better equip their front-line supervisors to cope with potential employee problems reduce the number of disputes.

Interestingly, studies have shown that companies that are well prepared to deal with employee disputes based on sophisticated communications and training programs for their supervisors can reduce problems from ever arising by as much as 50 percent to 75 percent.

THOMAS E. REDDIN is a partner and Chair of Labor and Employment Section with Godwin Pappas Langley Ronquillo LLP in the Dallas office. Reach him at (214) 939-4821 or