Co-written by Robert Vyverberg
Employers who have implemented or are
considering mandatory alternative dispute resolution (ADR) plans as a means
for resolving employment-related claims should be aware of the increasing
legal challenges to these plans from a variety of sources.† Federal and
state courts across the country are closely scrutinizing these plans when
employers seek to enforce them.† In 1997, the Equal Employment
Opportunity Commission issued a policy statement taking aim at mandatory ADR
plans, opposing compulsory arbitration of employment discrimination claims.†
Even members of Congress have joined in the attack against certain types of
mandatory ADR plans in the form of proposed legislation, the merits of which
were debated in subcommittee hearings earlier this year.† In light of
these developments, this article discusses the evolution of mandatory ADR
plans and the benefits of implementing such plans.† The second article in
this series identifies ways in which these plans should be designed, or
modified if already in existence, in order to withstand challenges to their
Before delving into the nuts and bolts of
mandatory ADR plans, some background information is in order.
What exactly are mandatory ADR plans?
In the most common application, these are
written plans implemented by the employer under which employees must agree as
a condition of employment to waive their right to pursue certain
employment-related claims in a court of law.† Instead, the sole means for
resolving such claims is through private mediation and/or arbitration before a
neutral third party.
Mandatory ADR plans, which invariably cover
nonunion employees, started gaining widespread approval in 1991 with the
United States Supreme Court's decision in Gilmer v. Interstate/Johnson Lane
Corp.† In Gilmer, the Court upheld a mandatory arbitration agreement
barring the plaintiff, a securities representative with the New York Stock
Exchange, from pursuing an age discrimination claim in federal court.†
From that point forward, more and more employers have adopted mandatory ADR
plans covering a wide range of employment-related claims, most significantly
discrimination and harassment claims under federal and state statutes.
Why are mandatory ADR plans desirable?
Generally speaking, when compared with
employment-related lawsuits in the courts, private mediation and arbitration
proceedings are much quicker and less costly.† Discovery, while allowed,