Robert M. Vercruysse, Editor; Ann M. Nicklas, William E. Altman, Associate Editors
Vercruysse Murray & Calzone, P.C.

Vol. 19, No. 2
April 2008

QUICK TIPS

Arbitration and mediation can help resolve disputes

Gary S. Fealk

Many businesses are turning to alternative dispute resolution to resolve disagreements with employees and avoid the expense and disruption of lawsuits. Here's a look at some common alternative dispute resolution methods.

Internal procedures

One of the best ways to avoid litigation is to have an internal complaint and investigation procedure. To properly defend against sexual or racial harassment claims, you should have a complaint and investigation procedure that applies to harassment complaints, at the very least. A general complaint procedure for other claims can also provide a process for resolving issues before they get to litigation. Complaint procedures give employees an outlet to bring their concerns to management and allow you the opportunity to address complaints early on.

Mediation

If a complaint progresses to the point that litigation is threatened or actually filed, mediation can help you reach a swift resolution without the time or expense of a lawsuit. In mediation, a neutral person selected by you and the employee hears each party's version of events and attempts to reach a resolution that you both can live with. At some point in the mediation, the mediator will probably separate you and the employee and then go back and forth between you in an attempt to broker a deal. Mediation is a nonbinding process ― the mediator doesn't impose a resolution on the parties. If either of you decides that the mediation isn't going to lead to a resolution that you're comfortable with, you can end it.

The Equal Employment Opportunity Commission (EEOC) and the Michigan Department of Civil Rights (MDCR) have their own mediation procedures that are available when charges of discrimination are filed. Like private mediation, the EEOC's and the MDCR's dispute resolution procedures are voluntary and nonbinding. But while private mediators are paid for by the parties involved in the dispute, EEOC and MDCR mediators are paid by the government.

Arbitration

Arbitration differs from mediation in that it's akin to a shortened lawsuit in which you and the employee agree to submit the dispute to a neutral party who will make a decision resolving it. Arbitrations are informal hearings in front of arbitrators. The arbitrator acts as a judge and jury, deciding which evidence is admissible, ruling on legal issues, and making findings of fact.

The decision of an arbitrator is generally final and binding. Unlike a court decision, however, there are few appeal rights (unless the parties agree otherwise). Usually, an arbitrator's decision cannot be overruled unless he acted outside his authority, for example, by making rulings on issues he wasn't asked to decide. The primary advantage to arbitration is that it's faster and generally less costly than a lawsuit.

You can agree to arbitrate a claim either before or after it arises. Predispute arbitration agreements covering employment claims must be carefully drafted; otherwise, one party may be able to cancel the arbitration agreement and go to court anyway. Also, if you want to take discrimination cases out of the court system, your predispute arbitration agreement must meet certain procedural requirements mandated by law (e.g., a right to some reasonable fact-finding procedures), so careful drafting is essential.

Case evaluation

Case evaluation isn't alternative dispute resolution in the traditional sense. Rather, it's a procedure imposed by Michigan courts to attempt to force a settlement. Under this process, you and the employee each provide your version of the case to a panel of three attorneys who then place a dollar value on the case. The value usually reflects an amount that they believe will have the best chance of settling the case. Each party must accept or reject the case evaluation, but if you reject the proposal and don't do at least 10 percent better at trial, you'll have to pay the attorneys' fees incurred by the employee after the rejection (and vice versa).

Bottom line

Litigation is costly and disruptive to your business. Although mediation or arbitration might not be the best solution in every case, alternative dispute resolution often can help you resolve employment problems before they end up at the courthouse.

Gary is an attorney and shareholder in Vercruysse, Murray & Calzone, P.C., in the Detroit metropolitan area. You can reach him at gfealk@vmclaw.com or (248) 433-8708.

Copyright 2008 M. Lee Smith Publishers LLC

MICHIGAN EMPLOYMENT LAW LETTER is intended to provide information but not provide legal advice regarding any particular situation. The information in this Law Letter is to make you aware of the implications of several contemporary problems. This Law Letter is not intended to be, and should not be regarded as, a legal opinion or legal advice. It is simply not possible or prudent to offer legal advice or a legal opinion without a prior thorough investigation and analysis of the facts attendant to any specific situation.