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Integrating alternative dispute resolution procedures into a larger workplace anti-discrimination and harassment program further decreases the chance of workplace disputes exploding into giant jury awards or settlements.

Such courtroom alternatives as arbitration, which uses an impartial third party to make a final and binding determination, and mediation, which uses an impartial third party to assist the parties in reaching a settlement, are quicker, more private and less expensive ways for employers to solve employee grievances, observers say.

Moreover, such internal ADR programs as internal mediation and open-door policies, which encourage employees to meet with supervisors to discuss workplace disputes, are a way employers can intervene early and potentially solve problems before they escalate to the point requiring formal mediation or arbitration.

Together, these ADR procedures should be integrated into an employer's overall anti-harassment and anti-discrimination program, which should be based largely on training and education (BI, Dec. 23/30, 1996), consultants advise.

"The trend to integrate the internal with the external into a comprehensive plan.*.*.that's the cutting edge," said Karl Slaikeu, president of Chorda Conflict Management Inc., an Austin, Texas-based consulting group that works with risk managers to implement alternative dispute programs.

Many employers make the mistake by having their "main emphasis on outside mediation," Mr. Slaikeu said. "It's early intervention and prevention through training that helps" employers avoid large public discrimination and harassment cases.

Risk managers "realize how high the stakes are," he continued. They know an employment case can lead to a potential boycott of the company.

Consumer groups announced boycotts against Texaco Inc. and Mitsubishi Motor Manufacturing Co. of America after allegations of race discrimination and sexual harassment charges, respectively, late last year.

Solving employment-related disputes with ADR procedures "is the wave of the future," said Karen Ludington, a labor attorney now with her own employment consulting firm, The Ludington Co. Inc., based in Holden, Mass. ADR procedures should "be one piece of a whole complex system" to reduce exposure to discrimination and harassment suits.

Indeed, a full range of internal and external ADR procedures is becoming more common in employment contracts, personnel manuals and employee handbooks, according to the American Arbitration Assn.

"The level of interest is just tremendous," noted Robert E. Meade, national vp-program development for the New York-based non-profit dispute resolution organization.

"I've worked with 300 companies in designing programs that are in effect now. That covers 3.5 million people. And in the last 14 months, I've worked with 200 more companies that have programs on the drawing board."

The American Arbitration Assn. recently issued a new guide to help employers effectively design an employment dispute resolution plan as well as descriptions of internal and external ADR options (see chart, page 1).

One of the advantages coming out of ADR programs is the ability to act as a risk prevention tool for employers.

Employers that have integrated ADR programs say they can effectively track patterns of employment-related grievances over time-much like workers compensation claims-and can then address potential problems before they escalate into larger, possible multiparty complaints.

One such company is Brown & Root Inc.

Beginning in 1993, the Houston-based engineering and construction firm required all of its 30,000 employees, as a condition of employment, to resolve all legal claims against the company through an internal program. The company offers employees four alternative dispute options: an internal open-door program; an internal ombudsman program, where a neutral third party confidentially investigates and proposes a settlement; an outside mediation program; and an outside binding arbitration program (BI, May 15, 1995).

Brown & Root not only has saved 50% on its legal fees since the ADR program's inception four years ago, but the program "allows the company to effectively understand what's going on in the workforce," said Bill Bedman, assistant general counsel of human resources.

By tracking patterns of complaints, the company has a handle on the number and types of grievances employees bring and from which operating unit they arise. This gives the company time to make decisions to solve a potential problem before "it gets too far down the pipeline," he said.

"So if there is an abnormal number of sexual harassment cases, one can do something about that," he said, adding the company has changed some of its policies and moved management around as a result of problems that were tracked.

This is not to say Brown & Root does not have employment claims. "We're not perfect," Mr. Bedman said. "But, we have management control we would not have otherwise. We tend to have a general idea of what is going on so we don't wake up in the morning and ask how we got someplace."

Employers interested in drafting an ADR program can turn to the American Arbitration Assn.'s new "Resolving Employment Disputes: A Practical Guide" for some help. The new guide serves as a companion to the association's "National Rules for the Resolution of Employment Disputes," which was released last year (BI, June 3, 1996).

The new guide includes a checklist of considerations for employers and descriptions of the full range of legally available ADR options.

The guide "is a collection of issues, questions and information that I've been hearing time after time after time," Mr. Meade said.

Among the considerations listed:

Employers need to include a fair method of cost-sharing between the employer and employee to ensure affordable access to the ADR system for all employees. Some ADR plans allow employees to pay only a small portion of the initial filing fee of the arbitration or a percentage of the filing fee based on the employee's salary, the guide explains.

Employers need to specify the nature of the claims to be covered under the ADR program. Some employers may want the ADR provision to be as broad as possible, while others may choose to exclude certain types of claims.

Employers need to give employees clear notice of their right of representation. The plans also may provide information about institutions that provide assistance to people who cannot afford representation. Employers also may consider providing a method of reimbursement of at least a portion of their legal fees.

Employers need to allow for the same remedies and relief that would have been available to the parties had the matter been heard in court. This authority includes the right to award compensatory and punitive damages, attorney's fees and other remedies available under applicable law in court.

The plan needs to state clearly that it does not preclude an employee from filing a complaint with a federal, state or other governmental administrative agency.

Copies of "Resolving Employment Disputes: A Practical Guide" can be obtained from the American Arbitration Assn.'s World Wide Web site at or by contacting the customer service department at 212-484-4000.