Steve MehtaBy Steven G. Mehta

Many employers are now agreeing to use mediation as a form of resolving disputes with employees.  In fact, over the last 10 years, mediation has become the most popular form of alternative dispute resolution used both inside and outside of the court systems.  For example, the Los Angeles Superior Court system resolves approximately 50% of its cases through its court mediation panel.  In addition, a substantial percentage of additional cases are also resolved through private mediation.  In a recent study of federal courts, mediation was found to resolve as much as 80% of the disputes.  As such, it is important to understand what mediation is as well is to understand the benefits of mediation.

Mediation is a process where a neutral third party listens to both sides’ concerns and tries to help each side arrive at a fair resolution.  Many people often confuse mediation with arbitration, where each side presents its case and then a neutral third party “arbitrator” make a final determination.  The mediation process can last from a few hours to a few days depending on the complexity of the case.  However, most employment cases can be resolved within one day, which is considerably less than the many years required to resolve lawsuits.

The mediation process has gained substantial favor in employment disputes because of several reasons.  First, mediation is far more cost-effective that going through litigation.  Often, litigation can last for several years and cost hundreds of thousands of dollars.  In fact, the average cost of litigating an employment dispute is over $75,000; whereas, mediation can usually resolve a dispute within a day.

Second, mediation allows the parties to be part of creating a resolution instead of having a decision imposed upon them by outsiders.  For example, if the employee and employer are having a dispute regarding employee discipline, the mediator will talk to both sides regarding their positions.  In addition, the mediator may tell each side their respective problems and why each side may not necessarily be seeing the entire picture.  In doing so, the mediator will slowly be able to help the parties to identify possible solutions that may be workable in the circumstances.

In one employment case that I mediated, the employee felt that she was terminated because of her sex and age.  On the other hand, the employer felt that the employee’s performance was inadequate and that she was terminated for performance reasons.  The employee’s main concern was to have a good recommendation for future employment whilst the employer’s main concern was to avoid bad publicity.  By hearing both sides and letting each side express its concerns, I allowed each side to vent its frustrations regarding the relationship.  Once that was accomplished, the parties, with my help, were quickly able to arrive at a fair solution which included the employee receiving a fair but neutral reference letter and the employee agreed not to make bad publicity for the employer.  In that case, unlike in a lawsuit, both sides gained something from the dispute.

Third, by letting each side express its concerns in a non-hostile and impartial setting, the mediation often minimizes a dispute because the parties have talked their issues out.  On the other hand, once the parties head towards litigation, the dispute usually escalates into something worse.  Many cases have been successfully resolved well before any lawsuit is filed.

Many employers are now placing mediation clauses as a mandatory requirement for all employment disputes between employers and employees.  Often this requirement is placed in an employment manual or employment contract.  Generally, the mediation clause requires the parties to first try to work out the dispute informally.  However, if the dispute is not resolved, then the parties agree to go to mediation immediately before a third party mediator.

Even if you don’t have a mediation clause, it is very easy to initiate mediation.  If an employer suspects that a dispute will occur or if a dispute actually takes place, the employer can simply suggest that mediation would be something valuable.  Often the employer’s investment in a few hours of mediation can pay off by eliminating the dispute before it has a chance to escalate.

Although mediation can be used in many circumstances, the following scenarios are examples of times when an employer can suggest mediation:

  • An employee is angry about being terminated.
  • An employee accuses another employee of harassment.
  • The employee claims that wages are not paid or breaks are not given.

Mediation is now considered one of the best ways to resolve disputes.  Not only does it allow the parties to take ownership of the solution, but it also assists the parties in being able to properly resolve disputes rather than escalating disputes into huge legal battles.  Finally, mediation allows people to truly listen to each other; and by doing so, can help to prevent disputes in the first place.

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