Overview: Alternative dispute resolution (ADR) is a term for both proactive (dispute identification) measures and reactive (dispute resolution) procedures that employers use to identify risk and reduce costs. The earlier a problem is identified in the life of a dispute, the better chance the employer has to address it in a timely, cost-efficient way. HR often has a key role in implementing ADR protocols, receiving complaints from employees and handling grievances.
If disputes progress beyond intra-office matters, ADR also encompasses litigation-prevention tools like arbitration and mediation. Arbitration is a voluntary process between the employer and employees, meaning that both parties have to agree to participate. It is more common in a unionized workforce setting, but is becoming increasingly popular for all employers because it involves a final, binding decision. Mediation, on the other hand, can be voluntary or involuntary, depending on where a claim begins. Some state court systems do not require parties to mediate their claims, while others will direct parties to mediation as a means to determine if the parties can resolve their dispute amicably before proceeding with litigation. The mediator's final decision is hardly ever binding which makes mediation a useful tool for parties to analyze the strength of their positions.
Regardless of the type of ADR, HR plays an active role in promoting the employer's interests, either by acting as an arbiter between disputing parties in the proactive phase, or by supporting the employer's position in the reactive phase.
Trends: Due to the rise in and ever-increasing costs of litigation, employers are increasingly turning to ADR as a solution. Labor disputes, wage and hour, and discrimination claims in particular are increasingly common and employers need to take steps to stem the tide of lawsuits. ADR is a valuable and effective means to accomplish that goal, particularly if utilized in both proactive and reactive ways.
Author: Melissa Boyce, JD, Legal Editor
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Updated to reflect state's law expressly permitting union security agreements, effective June 15, 2017.
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Updated to reflect information on case law regarding mandatory arbitration under the Uniformed Services Employment and Reemployment Rights Act.
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HR guidance on alternative dispute resolution methods, its usefulness in the pre-dispute phase and its usefulness as a means to resolve pending disputes.