Human Resource Risk Management Lecture


June 5, 2018

Bernard F. Cookson

Lecture: Week #1

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Following are the topics for this week:

Alternative Dispute Resolution (ADR) and Privacy Rights


1.1 Distinguish between different types of ADR.

1.2 Assess legal compliance and privacy concerns in the workplace.


Distinguish Between Different Types of ADR

Employer ADR Programs

Disputes in the workplace are inevitable so how you handle them is the key. Negotiation, mediation and arbitration can be applied progressively.


Negotiation is the give and take necessary to conclude an agreement. You should remember that when negotiating that you are usually trying to solve a joint problem and that the other side needs a win too.  If you can reach a give and take solution you can both walk away happy which should be the goal of a good negotiation.


Mediation is a meeting with a neutral party intended to facilitate a negotiation. The mediator will not make any decisions but the mediator will try to bring the two sides together.  Mediators really should be trained in the art of mediation. Picking a neutral third party as a mediator may seem like a good idea but a trained mediator will focus the discussion between the parties towards a mutual agreement. Some people are very good at bringing parties to a joint consensus and actually make a living mediating. 

Jose indicates that others mediate without even thinking about it and that reminded him of a story that he wanted to relate. As president of a bowling league he was looking for some new members to run for office in the next election. Jose asked one fellow to run that he thought would be good at the president's role but that person said: "no thank you, I have seen you break up too many fights and I do not want to get involved that way." Jose never broke up any real fights but a few of the disagreements could very well have been real fights if he did not get involved. Jose never thought much about the comment at the time since it never occurred to him that the mediation he was doing was such a big deal. As he reflected on the exchange it seems that getting involved early was the key to his success in resolving disputes. Managers need to recognize when to become mediators and when they should bring in a professional mediator.

Arbitration (Contractual, Voluntary/By Agreement of The Parties, and Court-Mandated)

Arbitration is the expression of a decision, binding or non-binding, based upon a review of the facts. When you get to arbitration you are looking for an imposed decision. People sometimes confuse mediation and arbitration but when the arbitrator is required one of the parties is typically not very happy so win/win for mediation and win/lose for arbitration is usually a pretty accurate description. As indicated there are contractual agreements to arbitrate and court mandated arbitration. 

The contractual agreements that we sign typically mean that there are no court options except for the enforcement of the arbitrator’s decision. If the court mandates arbitration, as they sometimes do in divorce court, that is one step but you can still use the court option if you do not like the arbitrator’s decision. We are in a Human Resource class so the following is our class focus.

Employer Alternative Dispute Resolution (ADR) Program

Many employers use agreements to force arbitration as the final method of dispute resolution. 

Jose suggests the following agreement for all company employees: "Employee understands and agrees that, as a condition of employment, employee agrees to arbitrate all disputes arising out of or related to the termination of employment, as well as any unlawful discrimination, or unlawful harassment (including sexual harassment) claims. Only an arbitrator, not a judge or a jury, will hear such disputes. This agreement also precludes any class action litigation regarding these disputes"

Jose states that businesses are increasingly inserting such arbitration clauses into consumer contracts as well as into employment agreements.  

Maria thinks that because of the uneven bargaining power of consumers and employees the only remedy for this trend is legislation that would protect the consumer and the employee from mandatory arbitration agreements in certain situations.

Jose indicates that following is the history of employer/employee arbitration agreements right through the May 2018 5-4 Supreme Court decision in Epic Systems that the Human Resource students really should read and try to understand. These issues are complicated and will yield conflicting historical decisions.

In California legislation provided some relief from class action preclusions in arbitration agreements but the U. S. Supreme Court ruled the California law violated the Federal Arbitration Act (FAA). A divided Supreme Court held that the FAA preempts such state rules. 

Justice Antonin Scalia, writing for a five-justice majority, stated that the purpose of the FAA was to promote arbitration as an efficient and expedient dispute resolution tool. “The overarching purpose of the FAA … is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings,” Scalia wrote. “Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.”


No. 09–893.        Argued November 9, 2010—Decided April 27, 2011

         Jose notes that legislators in the USA often introduce an Arbitration Fairness Act that would rectify the ruling by the court but chances of passage are slim.

Shown Here:
Introduced in Senate (03/22/2018)

Arbitration Fairness Act of 2018

“This bill prohibits a predispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute.”

Retrieved 31 May 2018 from:

We also had a U.S. National Labor Relations Board decision that seemed to be contrary to the U.S. Supreme Court decision.

D. R. Horton, Inc. and Michael Cuda. Case 12–CA– 25764 

January 3, 2012 DECISION AND ORDER 


In this case, we consider whether an employer violates Section 8(a)(1) of the National Labor Relations Act when it requires employees covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours or other working conditions against the employer in any forum, arbitral or judicial. For the reasons stated below, we find that such an agreement unlawfully restricts employees’ Section 7 right to engage in concerted action for mutual aid or protection, notwithstanding the Federal Arbitration Act (FAA), which generally makes employment-related arbitration agreements judicially enforceable.1 In the circumstances presented here, there is no conflict between Federal labor law and policy, on the one hand, and the FAA and its policies, on the other.

Jose states that the 2018 Epic Systems Corp. v. Lewis U.S. Supreme Court decision negates class action lawsuits by employees that were previously allowed. Maria says I understand that the most recently appointed Supreme Court Justice Gorsuch wrote this 5-4 majority decision. We certainly can have conflicting decisions based upon the philosophy of the justices. 





No. 16–285. Argued October 2, 2017—Decided May 21, 2018*

Held: Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.

If an employee's claim against their employer is not specifically related to their duties as an employee, then there is still a chance for a day in court. Following is an excerpt from an unfortunate recent case of potential inappropriate employer action where the 11thCircuit of the U.S. Federal Court of Appeals reached that conclusion.

All five of those claims involve factual allegations about how the cruise line and its officials treated Doe after learning that she had been raped, including allegations that she was kept on the ship against her will, that she was prevented from getting medical attention off the ship, that her rape kit was destroyed in the incinerator, and that her confidentiality as a rape victim was intentionally violated. Nothing about those allegations relate to, arise out of, or are connected with Doe’s crew agreement or her duties for Princess Cruise Lines as a bar server. The cruise line could have engaged in that tortious conduct even in the absence of any contractual or employment relationship with Doe. As a result, those five claims are not “an immediate, foreseeable result of the performance” of the parties’ contractual duties or Doe’s services as a Princess Cruise Lines employee, and they are not within the scope of the arbitration clause. Hemispherx, 553 F.3d at 1367. 

Retrieved 28 September 2011 from:

EEOC Binding Arbitration Position

“VII. Conclusion The use of unilaterally imposed agreements mandating binding arbitration of employment discrimination disputes as a condition of employment harms both the individual civil rights claimant and the public interest in eradicating discrimination.  Those whom the law seeks to regulate should not be permitted to exempt themselves from federal enforcement of civil rights laws.  Nor should they be permitted to deprive civil rights claimants of the choice to vindicate their statutory rights in the courts -- an avenue of redress determined by Congress to be essential to enforcement.”

The U.S. Equal Employment Opportunity Commission (EEOC) NOTICE; Number 915.002; Dated July 10, 1997; 1. SUBJECT: Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment (revised 9/14/2004).

Retrieved 31 March 2015 from:

Agreeing to Arbitration
               Maria states that most students say they have never signed an arbitration agreement. Jose says that 
is because the agreements and contracts that they sign just have a “Dispute Resolution” clause that nobody
reads. Sometimes they do not even know they are contracts since they are just policies in a handbook. Maria 
asks if Jose has an example, yes, I do from Findlaw.

Be Careful What You Sign

As mentioned, it has almost become common practice for some employers to include employment arbitration agreements inside of standard employment forms and documents. Because of this, many employees often sign these agreements without realizing it during the course of completing employment paperwork. Employees often do not know that they have signed away their rights to bring a lawsuit because the employment arbitration agreement was included as a clause within an employment contract, or in an employee handbook.

Retrieved 7 June 2018 from:
Jose has another example regarding surgery rather than employment but it does protect employees and 
consultants. Maria says you are kidding? Unfortunately, no I am not.

            Surgery is a good example of a place where arbitration is included as the dispute resolution method when the patient is signing the agreement to undergo the surgery. From the doctor and the facility perspective arbitration is great since it is private as opposed to a public court proceeding. If there was a case of malpractice the victim is compensated but no one else knows about the issue. The lack of publicity aspect is very important to the practitioner and the facility, not so much to the public.