Alternative Dispute Resolution: Recent Trends and Developments - Part One of a Two-Part Series

Author:Mr Michael Ranallo
Profession:Holland & Knight LLP

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,


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