Senator Feingold has recently introduced legislation labeled “The Arbitration Fairness Act” which is designed to eliminate ALL the mandatory Alternative Dispute Resolution Programs (ADR) implemented by Employers in America and force Employers to go to court instead of mediation and arbitraiton. I strongly oppose this legislation and here is why…..
Hundreds of thousands of Employers in the United States have implemented an Alternative Dispute Resolution Program within their company in an effort to reduce the number of lawsuits and to significantly reduce the cost of employee/employer disputes. The traditional method of going to court and arguing in front of a jury is extremely time consuming and expensive. I have seen Plaintiff Attorney’s take on cases they know they cannot win in court, simply because they know either the insurance company or employer will settle the suit, rather than spend the time, money and effort in a traditional court case. I’m not questioning Attorney’s, my sister is a practicing Attorney, I work closely with some very fine professionals who have more ethics in their little finger than a lot of business men do, but what I am questioning is a Congress that is wanting to pass legislation that is not good for business or for employees in my own opinion and they (Congress) are trying to pass it off as something that is “Good for America”. Never in my life will I believe more lawsuits are good for America! Lawsuits are expensive, the rising cost of healthcare is a direct result of malpractice insurance that is needed to cover and avoid lawsuits.
In response to the runaway costs and the incredible amounts of time spent on the traditional lawsuits, employer’s began installing Alternative Dispute Resolution (ADR) programs into their company as a term and condition of employment. We at www.hrfix.com began installing ADR programs with our clients over 15 years ago and have hundreds of clients who have had great success with them. ADR’s appeared to be the solution to reduce the number of lawsuits that may not be successful in court but were certainly strong enough to warrant a settlement to avoid the costs of a trial. The key advantage of ADR is that Arbitrators have the authority to limit the amount of discovery, the number of witnesses, etc… and by doing so, managing the cost of the process. In addition, the employee’s/claimant’s percentage of the award was more with ADR as the legal fees and expenses were typically less. ADR historically takes 12 -18 months to complete whereas a traditional trial can take 3-5 years. Anyone can do the math on that one – I have thousands of employees through our clients that when questioned prefer the ADR method of resolution over the traditional jury trial. They understand it is faster. The concept of resolving disputes without losing their job or alienating their employer is far more appealing to them.
Recently the ADR process has been less attractive than in years past because more and more employers are using the process and this has caused the process to be slower, but not any near as slow as a jury trial process. Is ADR the best method everytime, no it is not, I have seen cases in which a summary judgement would have been wonderful, instead they went to mediation and were settled. However, the majority of the time thus far, my experience leads me to believe that ADR is still the best process for both the employee and employer.
As discussed above, there are significant advantages for employers and employees using the ADR model. Trial Attorneys, however, opposes this model, for obvious reasons – less trials, less revenue. Not to fear Congress is here to help them, AND the Unions! As shown in the article below Senator Feingold has introduced legislation that will ban employers from having arbitration agreements as a condition of employment. The Senator believes the employer has a stronger bargaining position over the employees and as such it is not fair. Let’s not dive into the reality that most ADR plans are binding and if an employer loses, he/she has no recourse in most cases, the opportunity to appeal a case for years to come and thereby “starving” the plaintiff into a settlement of less money is removed by the ADR process.
No, this has nothing to do with what is good for the employee. I have never met an employee who went through the traditional jury trial and believed it worked out for them. Just this week, I was told of an incident in which an employee filed a sexual harassment suit against her employer, a very large national firm. The lawsuit went on for 5 years. During that time she did not work at all, she applied for jobs but under advice of counsel informed all potential employers that she left her last company due to an on-going lawsuit. She was never offered a job. The end result, the employee received a small percentage of what what her salary would have been and agreed not to apply for any positions with her previous employer. Problem is her previous employer makes up about 40% of the industry so it is very difficult for this person to find work. I’ve heard more of these lawsuit horror stories than I have success stories. This tells me the traditional litigation needs improvement, and ADR is a big step in the right direction.
According to the Senator, this new legislation will not prohibit Arbitration, it will allow the employee (and their attorney) to agree on arbitration after an incident has occurred. REALLY? Is an Attorney going to give away the ability to increase revenue over an extended period of time and opt for arbitration. Does an Attorney want the opportunity to get in front of 12 people making decisions based heavily on emotion or face a judge or another Attorney making decisions on law and precedence. If I was a Plaintiff Attorney, I’d take the jury!
Truthfully, the cost and length of the ADR process has grown over the years, but I still believe it is advantageous to both parties. What I truly don’t understand is why Senator Feingold believes it should be outlawed as a term and condition of employment for everyone except Unions. Why is it unfair to non-union workers but good for unions? The Senator wants us to believe he’s acting in the best interest of the working man. Or maybe it’s just the “Unionized” working man.
Rest assured, this is not for the employee – if the Senator really believed this was bad for the “working man” he would not exempt labor unions. Do employers have a stronger bargaining power than the unions? I don’t think so, I have never seen a non-union employer force an applicant to join their group and pay the employer dues in order to work and earn a living.
Employers can’t have ADR programs because it is not fair for the working man, but unions can. This makes me sick! I am so tired of our Congress today – they have no shame and they are not even smart enough to hide it! Or maybe they are convinced we are not smart enough to care…..
The below article was written by the law firm Barker Olmsted & Barnier
Congress May Outlaw Employment Arbitration.
Congress is currently considering legislation called the Arbitration Fairness Act (S. 931, H.R. 1020). If passed, the law would ban mandatory arbitration between employers and employees. Essentially, the law would invalidate every arbitration agreement currently in place in the employment context. No employment law cases would be decided in arbitration unless the employee agreed to do so at the time the employee made a legal claim. Senator Russ Feingold sponsored the bill. Senator Feingold believes that arbitration should be banned unless the parties agree to participate after the dispute arises. In a press release, he states: “The Arbitration Fairness Act reflects the FAA’s original intent by requiring that agreements to arbitrate employment, consumer, franchise, or civil rights disputes be made after the dispute has arisen. The Act does not prohibit arbitration, but it will prevent a party with greater bargaining power from forcing individuals into arbitration through a contractual provision. It will ensure that citizens have a true choice between arbitration and the traditional civil court system. The Act does not apply to collective bargaining agreements.”For the full article click here.
