Alternative Dispute Resolution Overview – Part 1

From: Staffing

Alternative Dispute Resolution Overview – Part 1

Alternative Dispute Resolution Overview

Alternative dispute resolution (ADR) systems are designed to resolve conflicts and avoid costly and time-consuming litigation. ADR is generally all forms of dispute resolution without a trial. A model ADR program is designed to immediately bring disputes to the attention of key decision makers in an effort to settle the issue as soon as possible. The goal of ADR is to provide a forum for the parties themselves to work toward a voluntary, consensual agreement, as opposed to having a judge or other authority decide the case.

ADR Processes

Some ADR processes utilized in the workplace are mediation, arbitration, and early neutral evaluation.


Mediation involves a neutral party (mediator) who assists the parties in negotiating a mutually agreeable resolution dispute. Mediation is a confidential process, entered voluntarily, and can generally be terminated at any time. Mediators assist parties in framing the issues, structuring negotiations, and recognizing self-interests as well as opposing interests. The parties may meet with the mediator together or individually as the circumstances dictate. Mediators are not decisionmakers and cannot impose a resolution on the parties. Rather, the mediator is a facilitator of the communication process and the parties alone determine the resolution.


The American Arbitration Association (AAA) defines arbitration as a confidential, out-of-court resolution of a dispute between parties decided by an impartial third party (arbitrator). Arbitration may be utilized in any of the following formats:

  • Pre-dispute, voluntary final and binding arbitration.
  • Pre-dispute, mandatory nonbinding arbitration.
  • Pre-dispute, mandatory final and binding arbitration.
  • Post-dispute, voluntary final and binding arbitration.

Final binding arbitration is the most formal ADR method. In an arbitration agreement, employees and employers agree to submit their dispute to a neutral third party (arbitrator) and agree to abide by the arbitrator’s decision. Arbitration hearings are informal as opposed to court proceedings but include discovery, witness and evidence presentation, and basic legal processes (motions, etc.). Binding arbitration is final, and the decision cannot be appealed or addressed in court. In a nonbinding arbitration the parties may reject an arbitrator’s decision. According to the AAA, nonbinding arbitration provides the procedural processes of standard arbitration but with an informal hearing on the dispute’s merits and without the finality of a binding decision.

Federal Arbitration Act

The Federal Arbitration Act (FAA) (located at 9 U.S.C. §§ 1 – 16, 201 – 208, and 301 – 307) provides the basic arbitration legal principles. One key principle under the FAA is that any agreement to arbitrate must be in writing, but there is no requirement that the writing be formally executed or contained in a single, integrated written contract. The validity and enforceability of arbitration agreements are subject to basic contract law principles, including revocation.

Employers must be mindful that all states have arbitration laws with which compliance is required, but the FAA pre-empts state law. In Kindred Nursing Ctrs. L.P. v. Clark (137 S.Ct. 1421), the Supreme Court held that “[t]he FAA pre-empts any state rule discriminating on its face against arbitration, such as a law prohibiting outright the arbitration of a particular type of claim, and also preempts any rule that covertly accomplishes the same objective by disfavoring contracts that coincidentally have the defining features of arbitration agreements.”

Supreme Court and Arbitration

The U.S. Supreme Court has ruled that binding mandatory arbitration is lawful and enforceable as a substitute for civil litigation based on fair employment practice laws. Employers may include arbitration clauses in employment agreements, requiring the employer and employee to submit any disputes arising from the employment relationship to binding arbitration; for example, wrongful discharge disputes, infliction of emotional distress, discrimination, and harassment.

Clause Barring Class Actions

On May 21, 2018, the U.S. Supreme Court ruled in Epic Systems Corp. v. Lewis that an employer-required arbitration clause that bars employees from bringing class actions, and requires individualized proceedings, is permitted and enforceable. In Epic Systems, the issue before the court was whether employees and employers should be allowed to agree that any disputes between them will be resolved through one-on-one arbitration, or whether employees will always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers. According to the court’s opinion, per the FAA, Congress instructed federal courts to enforce arbitration agreements according to their terms, including terms providing for individualized proceedings.

Arbitration Clause Terms

According to the AAA, the major features of an arbitration are:

  • Written agreement to resolve dispute by the use of an impartial arbitration.
  • Outline of informal procedures.
  • Impartial and knowledgeable neutral arbitrators.
  • Final and binding awards enforceable in a court of law, as applicable.

Arbitration clauses must clearly detail the terms and limitations of the agreement. Key elements of an arbitration clause are:

  • Dispute coverage.
  • Type of arbitration (binding or nonbinding).
  • Signatures of all applicable parties to the current or future dispute.
  • Entry of judgment language.
  • Whether a panel of one or three arbitrator(s) will be used and where it will occur.
  • Remedies available for award.
  • Applicable rules and law, including confidentiality protections as applicable.
  • Fee and cost allocation.

Sexual Harassment and Mandatory Arbitration

Many states have enacted laws prohibiting the mandatory arbitration and confidentiality of sexual harassment claims. The National Association of Attorneys General (NAAG), comprised of Attorney Generals of all 50 states, the District of Columbia, and five U.S. territories, released a letter to the U.S. Senate and House leadership, “[u]rging Congress to help sexual harassment victims in the workplace by passing federal legislation that would eliminate mandatory arbitration agreements imposed by employers when sexual harassment claims are made. This legislative action would ensure a victim’s right to access federal or state courts to pursue justice.”

“Access to the judicial system is a fundamental right of all Americans. However, many employers require their employees, as a condition of employment, to sign arbitration agreements mandating that sexual harassment claims be resolved through private arbitration instead of court. Such agreements also have secrecy requirements.”

“Ending mandatory arbitration of sexual harassment claims would help to put a stop to the culture of silence that protects perpetrators at the cost of their victims,” and “…[w]e strongly support appropriately-tailored legislation to ensure that sexual harassment victims have a right to their day in court.”

Early Neutral Evaluation

According to the American Bar Association (ABA), early neutral evaluation is an alternative dispute process occurring after the filing of a lawsuit. The ABA delineates the process as follows:

  • The case is referred to an expert, usually an attorney, who is asked to provide a balanced and unbiased evaluation of the dispute.
  • The parties either submit written comments or meet in person with the expert.
  • The expert identifies each side’s strengths and weaknesses and provides an evaluation of the likely outcome of a trial.

The expert’s evaluation then assists the parties in assessing their case and with the goal of reaching settlement.