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Mediation of Employee Disputes:Better than Litigation When it Works

Mediation is a confidential and informal process intended to help people to settle disputes with the help of a neutral and professionally trained mediator. Typical cases involve discrimination claims, and disputes surrounding pay, perceived retaliation for employee actions, Workers' Compensation or termination.

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"My role is not to decide who is right and wrong," explained Edward J. Gutman, a Baltimore-based mediator. "My goal is to see if we can resolve the issue without all-out war."

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Unlike binding arbitration -- which is another alternative dispute resolution mechanism -- if mediation fails the parties can take their dispute to another level, such as the courts or arbitration if arbitration is provided for in the particular case.

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Labor attorney David Gabor of the Wagner Law Group believes bringing in a mediator promptly can be "of tremendous value to a company" for these reasons:

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Benefits of Mediation

Minor issues can be nipped in the bud "before they become litigation" and disrupt the employer-employee relationship.

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Mediation can convey to all employees that you are willing to listen to and resolve their concerns, thereby reducing the inclination of an employee to talk to an attorney. Attorneys may exaggerate the employee's prospects for a big payoff in order to land the client.

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The process is far less expensive than other dispute resolution mechanisms.

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Mediation can give you insights "about potential problem areas" within the company.

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» Gabor, a seasoned mediator, says that simple miscommunication is at the root of many of the disputes he has helped to resolve. "A personality dispute of innocent origin" can spin out of control.

» Mediation opens the door to non-monetary solutions. For example, in one instance, mediation led to a decision to describe an employee's departure not as a termination, as the employer had originally intended, but instead a consequence of a reorganization, improving the former employee's prospects for being hired elsewhere. Mediation can also result in a reversal of a decision to terminate the employee, or an agreement to give a positive or neutral reference.

Cash Settlements are Common

More typically, however, a financial settlement is involved. In Gutman's experience, most employers approach mediation with an expectation of making a cash offer to resolve the dispute. Typically the amount is less than the employee is seeking (and a tiny fraction of the cost of litigation), but the mediator can convey to the employee that his or her prospects for a large settlement may be limited.

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At the same time, the mediator may convey to the employer that offering too little -- even if the employer does not believe the employee has a case to stand on -- could be rejected out of hand and lead to a stalemate.

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If an employee files a discrimination complaint with the Equal Employment Opportunity Commission (EEOC), the Commission may propose mediation instead of litigation -- a service it provides without charge. Also, if a dispute has already been taken to court, the court may direct the parties to use a mediator before the court is willing to hear the case.

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Alert Employees to Mediation Option

Since the goal of mediation is to avoid having disputes filed with the EEOC or in court, employees must be aware of the option of mediation. A statement about mediation in the employee handbook can alert them to that possibility. The statement could essentially say, "We understand that from time to time issues arise in the employment relationship. When it cannot be resolved by the employee and supervisor, we encourage the use of a mediation," Gutman suggests. That would be followed by an explanation of how the process works.

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A typical mediation session may last four to six hours, although some can run longer. The cost of private mediation services, on an hourly basis, may be equivalent or slightly less expensive than hourly rates charged by attorneys -- particularly if the mediators are in fact attorneys. Often both parties agree to split the cost at the outset. However, an employer may decide to pay the entire fee as part of the resolution.

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» Discussions during a mediation session are considered strictly private, and comments or offers made during mediation are not admissible as evidence in court, should a failure of mediation lead to this. In Gutman's mediation sessions, all notes taken must be shredded before the parties leave the room. Nevertheless, employers can gain insights on an employee's position that could be helpful if the dispute is taken to court.

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