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The Mediation Disconnect

HR Magazine, May 2003If the EEOC's program is working so well, why aren't more employers willing to try it?

After a dozen years of using mediation, the U.S. Equal Employment Opportunity Commission (EEOC) is enthusiastic about this tool’s ability to resolve disputes between employers and employees. “Mediation is really time-efficient,” says EEOC Chair Cari M. Dominguez. “It resolves issues promptly. It doesn’t allow issues to fester.”

Charges that go into mediation are disposed of in an average of 86 days, she says—about half the time required for charges that are not mediated.

Employers that have tried mediation, a form of alternative dispute resolution (ADR), are enthusiastic about it as well, says the EEOC. The agency cites a 2000 study that showed 96 percent of employers that participated in EEOC mediation were willing to try it again. In fact, employers were slightly more satisfied with mediation than employees, only 91 percent of whom were willing to give mediation another try.

But it’s hard to make those figures jibe with another set of statistics from the EEOC: In fiscal year 2002, when the EEOC offered mediation (which it considers appropriate for more than half of the charges it receives), only 30.5 percent of employers accepted, compared to 83 percent of employees.

A Dark View

Why the disconnect? One reason may be that some employers are deeply skeptical of the EEOC.

“The EEOC is set up to help employees,” says a top human resources professional at one large Midwestern employer. “It’s not set up to try to really assess whether someone has been discriminated against.”

It’s not just a question of EEOC mediation being skewed toward the employee, she says. “We can usually overcome that. It’s more that it’s skewed toward a need that the agency itself has, apart from the needs of the employer and the employee,” to increase the number of settled cases.

Yet some employers who have participated in the program have not taken such a dim view.

For example, some employers appreciate the fact that EEOC mediation is much more informal than arbitration or litigation. In mediation, “You don’t have to respond to requests for information; you don’t have to obtain legal representation if you don’t want to,” points out Irene Hill, an attorney adviser for the director of the EEOC’s office of field programs.

The informality of the agency’s program has been valuable to Rick Muzingo, HR manager at the 250-employee Plymouth, Mich., distribution center of Spartan Stores, a six-state grocery and pharmacy chain. “It’s a civil way for the employer and employee to get together and try to work out their problem,” he explains. “It’s outside the setting of the company, and it’s very neutral.”

Lorraine Koc, general counsel of Deb Shops in Philadelphia, also appreciates the efficiency of the program. “It resolves the situation in a fairly expeditious way,” she says. “You get things done.” She has used EEOC mediation a half dozen times in the last few years and says her experience has been “positive—it’s been excellent.”

Adds Larry Stunkel, HR manager for Aurora Foods’ 500-employee frozen-food manufacturing plant in Jackson, Tenn.: “One of the nice things about mediation is that it may be your first opportunity to sit down and talk about whatever it is that’s taken place, and find out whatever it is that’s on the person’s mind.” He recalls a mediation when the employee was “confused and afraid” but was “very satisfied” after the mediation took place.

“My experience is that getting the operations person and the claimant together is really positive,” says Russ Oechsel Jr., manager of U.S. recruiting, staffing and employment compliance for the giant Houston-based oil company ConocoPhillips. “You don’t get to do that, at least not very well, when you’ve got an adversarial sort of a process going on.”

Timing Is (Almost) Everything

Because tempers can flare and conflicting positions can harden relatively quickly, timing can be critical to the success of mediation.

Michelle J. Grocock, whose Orlando, Fla., firm, Creative Resolutions, helps employers set up in-house ADR programs, has worked as a mediator in cases where a federal judge has forced an employer and employee to mediate a discrimination claim. Often, she says, attorneys’ fees held up a resolution. “A dispute that could have been resolved [early on] with an apology, or by dressing up a personnel file, or maybe by having some face-to-face discussion with a manager, was now a legal dispute and carried with it significant attorneys’ fees.”

It was with such obstacles in mind that the EEOC designed its program to allow mediation to take place early in the process, says Hill. “We thought that parties would be less entrenched in their positions, parties would not have expended a lot of time and resources on a charge, and it might make it easier to settle.” That has turned out to be generally true, she says.

Koc suggests that mediation through the EEOC can fall in an “optimal window,” when initial hostility has cooled but positions have not yet hardened to the point where “parties are not trying to resolve the issue between them but trying to get even with the other side.” In mediation, she says, “There’s an initial venting on both sides, but after that most of the time and energy is spent on fixing the problem, addressing those issues. In litigation, most of the energy tends to be negative.”

Money Matters

A sticking point for some employers is that they feel mediation places too much emphasis on making a payout to workers. Koc has spoken with employers who, she says, are “concerned that they will be expected to bring money to the table” even when they are convinced that they have not violated the law.

Indeed, workers who accept mediation “generally have an expectation of some kind of monetary offer to settle their claims,” says Gregory M. Davis, a management attorney in Chicago with the firm Seyfarth Shaw. “A sophisticated complainant will know that the employer has invested a significant amount of money in just being there,” particularly when the employer has called in an attorney. “They’re already putting money on the table. The complainant may expect that the employer is putting some value on the possibility of making the claim go away that day.”

But the idea of paying sticks in the craw of many employers if they believe the employee has no valid complaint. “If employers think that they’re on the side of the right and that they’re going to prevail after an investigation,” Davis says, “they’re going to tend not to want to go to mediation.”

Grocock believes employers often are reluctant to enter mediation because they don’t want to appear weak. “They feel they have made a good, legitimate business decision—whatever it is—and that for them to enter into a process where resolution is often reached through compromise will be interpreted as employer weakness.”

Stunkel concurs: “A lot of management people have the feeling that if you go into mediation and you settle, that that might be perceived as an admission of guilt. So, they’re very reluctant to do that.”

But Koc emphasizes that when Deb Shops has agreed to a settlement, it has not done so because it was wrong. “I honestly don’t believe that I’ve had a case where the company has done something that’s inappropriate or illegal,” she says. “So, someone might argue that some of these payments are not justified.”

But, she adds, “In several cases a complaining former employee sincerely believed that he or she was entitled to something.” A monetary settlement thus salves the former employee’s wounded feelings and saves the employer from the danger of much larger legal bills. In some cases, Koc says, the payments have been “a little bit more than I thought it was worth, on an individual basis,” but still justifiable, “to end a matter with finality.”

Koc adds, “A good mediator will explain [to an employee] that the likelihood of having a favorable outcome in the investigative process is low. That usually helps that type of employee see that while they feel wronged, they’re not going to prevail in a significant way.”Stunkel agrees that, to a large extent, money’s role in mediation depends on the quality of the mediator and the comprehensiveness of his view. “If you’ve got a really good mediator, you don’t necessarily walk in and lay cash on the table. There are people out there who have the skills, and people who really don’t understand.”

Stunkel, who has been involved in seven EEOC mediations at three different companies, recalls encountering one EEOC mediator who left a distinct impression on him: “The very first thing out of her mouth was, ‘Mr. Stunkel, just how much money did you intend to offer?’ [She was] very direct about it.”

Experience is crucial where EEOC mediators are concerned, says Doryce Norwood, who, as a senior counsel for ConocoPhillips, deals with employment issues arising among the company’s 20,000 retail marketing employees. Mediators who have several years’ experience “are going to be very good at it,” Norwood says. Mediators who have just started may be more likely to see resolution in terms of monetary settlements.

Money Isn’t Everything

Although the EEOC reports that its mediation program garnered $111.5 million for employees in almost 8,000 settlements in fiscal 2002, the agency resists the idea that its mediations are only about how much money the complaining employee will receive.

The EEOC uses “facilitative mediation,” Hill says, “and under facilitative mediation the parties design their own settlement. The mediator’s role is to help the parties. It’s definitely not EEOC’s intent that mediators pressure parties to settle cases for monetary benefits or for any other type of benefits.”

She adds that in 16 percent to 20 percent of the cases that are mediated, the only benefits that change hands are nonmonetary. Such benefits usually occur when the charging party is a current employee and could include a titular promotion, a change in supervisor or worksite or a reasonable accommodation for a disability.

Oechsel recalls one case involving a current employee that was resolved with “a genuine, sincere apology, and an effort to set things right between the supervisor and this employee. It was a situation that was perceived one way by the employee, when that wasn’t at all what the intention was, and things sort of mushroomed out of control.”

Benefits other than money may be available even for former employees, such as a letter of recommendation or perhaps an apology.

Unpleasant—But Effective

While nonmonetary benefits may be enough to resolve some mediation efforts, sometimes money will be the only answer. In such cases, paying out may be distasteful—especially if your organization had done nothing wrong—but it may be your wisest business move, experts say.

“Employers who are faced with any kind of litigation have to do a cost-benefit analysis,” says Davis, a member of SHRM’s Workplace Diversity Committee. “They have to decide whether they’re going to pay the costs associated with pursuing the litigation and establishing their innocence, or opt for the business decision of paying an amount of money at the outset, whether nuisance value or a larger amount.”

Says Stunkel: “You can walk away without resolving [an EEOC charge] and then take your chances on following through with a [written] response. But just doing that is expensive. It takes hours to prepare those things.”

Paul Salvatore, who represents management as an attorney with Proskauer Rose LLP in New York, thinks the choice is easy. “There are a lot of small and medium-sized employers who perhaps have never been through [litigation],” he says, “and they need to understand that the only ones in the process who win, at the end of the day, are the lawyers, because they get paid.”

Most cases never get to trial, Salvatore says, because the parties ultimately settle.

“Someone somewhere down the line decides, ‘We’ve paid enough,’ ” he says. “So, why bleed so much before you close the wound? There are certainly going to be cases that you’re not going to want to settle [through EEOC mediation]”—but, he says, not enough to warrant the 70 percent rate at which employers now decline mediation.

To chip away at that refusal rate, the EEOC is doing more than just talking. The agency has succeeded in getting more than 200 employers to sign “universal agreements to mediate” (UAM) all charges filed against them. The charging party, of course, has to agree and the employer reserves the right to opt out of any given case.

Having a UAM in place ultimately may gather more cases under the mediation umbrella, but, in the short run, it expedites the process by identifying a regular point of employer contact and by eliminating the need to “sell” mediation to the employer on a case-by-case basis.

The EEOC also has launched a pilot program that allows selected employers a chance to resolve pending discrimination charges through their in-house dispute resolution programs. The fledgling “charge referral” program allows a charging party to have charge processing suspended for up to 60 days while the employee and employer try to resolve the dispute using the employer’s internal program. Employer programs must meet certain criteria for participation.

Michael Barrier is a former senior editor of Nation’s Business and former senior legal editor for American Lawyer Media. He holds a J.D. from the University of Chicago. He served as assistant attorney general in Arkansas.


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